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NEGATIVE 
NO.  94-821 55 


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Author: 


Board  of  arbitration  in  the 
controversy  between  the. 

Title: 

Report  of  the  Board  of 
arbitration  in  the  matter... 

Place: 

[Washington,  D.C.] 

Date: 

[1912] 


MASTER   NEGATIVE   # 


COLUMBIA  UNIVERSITY  LIBRARIES 
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Board  of  arbitration  in  the  controversy  between  the  eastern 
railroads  and  the  Brotherhood  of  locomotive  enrineers, 

1912. 

Report  of  the  Board  of  arbitration  in  the  matter  of  the  con- 
troversy between  the  eastern  railroads  and  the  Brotherhood  of 
locomotive  engineers,  appointed  in  conformity  with  an  agree- 
ment of  the  parties  made  at  New  York  city  under  date  of  April 
30th,  1912.  Charles  R.  Van  Hise,  chairman  ...  r Washington ? 
D.  C,  1912i 


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BOARD  OF  ARBITRATION 


In  the  matter  of  the  controversy 
between  the  Eastern  Railroads  and  the 
Brotherhood  of  Locomotive  Engineers 


NOVEMBER  2,  1912 


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In  the  matter  of  the  controversy 
between  the  Eastern  Railroads  and  the 
Brotherhood  of  Locomotive  Engineers 


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Appointed  in  conformity  with  an  Agreement  of  the  parties  made 
at  New  York  City  under  date  of  April  30th,  1912 


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Charles  R.  Van  Hise,  Chairman 
Oscar  Straus  Otto  M.  Eidlitz 

Frederick  N.  Judson  Daniel  Willard 

Albert  Shaw  P.  H.  Morrissey 


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NOVEMBER  2,  1912 


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Published  under  the  Direction  of  the  Secretary  to  the  Board, 

2023  G  Street,  Northwest, 
Washington,  D.  C. 


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TABLE  OF  CONTENTS 

PAQB 

Historical i 

Appointment  of  arbitrators 3 

Memorandum  of  agreement 4 

Railroads  parties  to  the  agreement 5 

Requests  of  engineers  submitted  for  arbitration 6 

Presentation  of  the  case 9 

Magnitude  of  the  problem 12 

Statement  of  the  problem 14 

The  position  of  the  engineers 14 

The  position  of  the  railroads 15 

Difficulty  of  the  problem  before  the  board 17 

Responsibility,  skill,  and  mental  strain  of  engineers 19 

Standardization 2I 

The  problem  of  compensation  to  capital 25 

Intercorporate  relationships 28 

Ability  of  the  roads  to  pay  increased  compensation 36 

Additions  and  betterments 41 

The  question  of  surplus 43 

Conclusions 43 

*The  basis  of  a  fair  wage 47 

Compensation  now  received 43 

Average  daily  compensation  of  engineers  and  other  classes  of 

railroad  employes  from  1897  to  1911 53 

The  principle  of  a  minimum  wage 77 

The  awards 79 

Passenger  rates 79 

Electric  service 79 

Freight  rates go 

Held  away  from  home  terminal 80 

Switching  service gl 

Belt  line  and  transfer  service 81 

Beginning  and  ending  of  a  day 81 

Initial  terminal  delay 81 

Final  terminal  delay 82 

Hours  of  service  law 82 

General  regulations 82 

Supplementary  explanation 83 

General  considerations 83 

Commission  control  of  public  utilities 86 

Labor  organizations  and  wages 87 

The  serious  nature  of  a  concerted  strike 89 

The  general  railway  strike  of  France 92 


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CONTENTS 


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PAGB 

General  Considerations — Continued 

The  Eastern  District  and  France  compared 94 

The  public  interest  paramount 95 

The  increased  power  of  organized  labor 96 

Limitations  of  present  board 98 

The  Erdman  and  Canadian  Industrial  Disputes  Acts 99 

Wage  commissions  the  remedy 104 

Limitation  of  right  of  free  contract 106 

Conclusion 108 

Explanatory  statement  by  Mr.  Willard 110 

Minority  report  by  P.  H.  Morrissey,  representing  the  Brotherhood 

of  Locomotive  Engineers Ill 

Standardization 115 

Additions  and  betterments  and  the  question  of  surplus  in  relation 

to  wages 117 

The  French  railway  strike  and  assumed  conditions  in  the  Eastern 

District  of  the  United  States 118 

Wage  Commissions  and  compulsory  arbitration 121 


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HISTORICAL 

Earlyinthe  year  1912,  the  Brotherhood  of  Locomotive  Engineers, 
on  behalf  of  the  engineers  employed  on  fifty-two  railroads  in  the 
eastern  section  of  the  United  States,  presented  a  concerted  request 
to  the  management  of  these  railroads  for  a  general  increase  in 
wages  and  for  certain  modifications  in  the  rules  governing  their 
employment.    This  concerted  movement  resulted  in  conferences 
held  m  New  York  City  on  March  14,  15  and  25,  between  represen- 
tatives of  the  Brotherhood  of  Locomotive  Engineers,  and  a  Confer- 
ence Committee  of  Managers  representing  the  railroads.    At  the 
last  of  these  conferences  the  representatives  of  the  railroads  de- 
chned  to  grant  the  requests  of  the  engineers  either  in  whole  or 
m  part. 

At  these  conferences  the  engineers  were  represented  by  Warren 
S.  Stone,  Grand  Chief  Engineer,  and  F.  A.  Burgess,  Ash  Kennedy 
and  M.  W.  Cadle,  Assistant  Grand  Chiefs,  of  the  Brotherhood  of 
Locomotive  Engineers. 

The  railroads  were  represented  by  J.  C.  Stuart,  Chairman  of 
the  Conference  Committee  of  Managers,  and  Vice-President  of 
the  Erie  Railroad;  A.  W.  Thompson,  General  Manager  of  the 
Baltimore  &  Ohio  Railroad;  C.  S.  Sims,  Vice-President  of  the  Dela- 
ware &  Hudson  Railroad;  H.  J.  Horn,  Vice-President  of  the  New 
York,  New  Haven  &  Hartford  Railroad;  A.  H.  Smith,  Vice-Presi- 
dent of  the  New  York  Central  Lines  East;  C.  E.  Schaff  Vice- 
President  of  the  New  York  Central  Lines  West;  S.  C.  Long 
General  Manager  of  the  Pennsylvania  Lines  East;  G    L   Peck' 
General  Manager  of  the  Pennsylvania  Lines  West;  J.  A.  McCrea' 
General  Manager  of  the  Long  Island  Railroad;  A.  T.  Dice  General 
Manager  of  the  Philadelphia  &  Reading  Railway;  J.  A.  Shepherd 
General  Manager  of  the  Western  Maryland  Railway;  and  B   a' 
Worthmgton,  Receiver,  Wheeling  &  Lake  Erie  Railroad.    (Mr. 

1 


2  RAILWAY  ENGINEERS  ARBITRATION 

C.  E.  Schaff,  absent,  was  represented  by  J.  J.  Bemet,  Assistant 
to  the  Vice-President.) 

The  refusal  of  the  railroads  to  grant  the  requests  of  the  engineers 
or  any  part  of  them,  led  to  a  strike  vote  among  the  engineers 
upon  the  roads  concerned;  93.3  per  cent  of  the  engineers  voted 
in  favor  of  a  strike  provided  a  satisfactory  settlement  could  not 
otherwise  be  made.  Had  the  Grand  Chief  and  his  Committee 
decided  that  the  situation  justified  so  doing,  it  would  have  been 
in  their  power  to  have  approved  a  strike  and  the  strike  would 
have  taken  place. 

ReaHzing  the  gravity  of  this  situation  which  threatened  most 
serious  consequences  to  the  public,  and  in  the  hope  that  some  means 
might  be  found  to  adjust  the  matters  in  dispute  without  the  calam- 
ity of  a  general  strike,  the  Hon.  Martin  A.  Knapp,  Presiding  Judge 
of  the  United  States  Commerce  Court,  and  the  Hon.  Charles  P. 
Neill,  United  States  Commissioner  of  Labor,  tendered  their  friendly 
offices  to  the  contending  parties.  They  were  impelled  to  do  this 
by  a  sense  of  duty,  although  the  terms  of  the  Federal  law  commonly 
known  as  the  Erdman  Act,  which  provides  a  means  for  the  media- 
tion and  arbitration  of  controversies  affecting  railways  and  their 
employes  engaged  in  railroad  train  service,  did  not  contemplate 
their  taking  the  initiative  in  matters  of  this  sort.  Their  attempt, 
however,  to  settle  the  difficulty  by  mediation  failed.  Thereupon 
they  undertook  to  bring  about  an  adjustment  by  arbitration. 

The  parties  in  the  case  agreed  to  the  principle  of  arbitration^ 
but  they  would  not  accept  arbitration  under  the  provisions  of  the 
Erdman  Act.  In  consultation  with  Judge  Knapp  and  Commis- 
sioner Neill,  it  was  arranged  that  the  questions  at  issue  be  sub- 
mitted to  a  Board  of  Arbitration  consisting  of  seven  members,  one 
to  be  named  by  the  railroads,  one  by  the  engineers,  and  these  two 
to  agree  upon  five  others.  It  was  furthermore  arranged  that  if 
the  first  two  arbitrators  should  not  be  able  to  agree  upon  the  five 
others  within  a  period  of  fifteen  days  after  their  own  appointment, 
these  five  were  to  be  selected  by  a  committee  consisting  of  the 


a 


RAILWAY  ENGINEERS  ARBITRATION  3 

Chief  Justice  of  the  United  States,  the  Presiding  Judge  of  the 
Commerce  Court,  and  the  United  States  Commissioner  of  Labor. 
The  railroads  selected  as  their  representative  Mr.  Daniel  Willard, 
President  of  the  Baltimore  &  Ohio  Railroad,  and  the  Brotherhood 
of  Locomotive  Engineers  selected  as  their  representative  Mr.  P.  H. 
Morrissey,  former  Grand  Master  of  the  Brotherhood  of  Railroad 
Trainmen.  These  two  failed  to  reach  an  agreement  within  the 
allotted  time.  They  agreed,  however,  to  a  list  of  names  from 
which  they  were  willing  that  the  other  arbitrators  should  be 
selected.  From  this  list  the  committee  named  appointed  the 
other  five  members  of  the  Board  named  in  the  communication 
below. 

These  five  members  of  the  Board  thus  appointed  were  notified 
of  the  appointment  by  letter.  To  this  letter  was  attached  a  mem- 
orandum giving  the  terms  under  which  the  arbitration  was  to  be 
carried  on  and  the  parties  concerned  therein.  The  letter  and 
memorandum  are  as  follows: 


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IN   THE   MATTER   OF  THE   CONTROVERSY   BETWEEN   THE   EASTERN 
RAILROADS  AND  THE  BROTHERHOOD  OF  LOCOMOTIVE 

ENGINEERS 


APPOINTMENT  OF  ARBITRATORS 

"A  controversy  having  arisen  between  the  Eastern  Railroads, 
so  described,  and  the  Brotherhood  of  Locomotive  Engineers; 

''And  the  contending  parties  having  agreed  to  submit  the 
matters  in  dispute  to  a  Board  of  Arbitrators  of  seven  members, 
as  appears  by  their  written  agreement  of  April  30,  1912,  a  copy 
of  which  is  hereto  annexed; 

"And  the  Eastern  Railroads  having  named  as  their  arbitrator 
Mr.  Daniel  Willard,  President  of  the  Baltimore  &  Ohio  Railroad 
Company,  and  the  Brotherhood  of  Locomotive  Engineers  having 
named  as  its  arbitrator  Mr.  P.  H.  Morrissey,  President  of  the 
American  Railroad  Employes  and  Investors'  Association; 

"And  the  two  arbitrators  thus  named  having  failed  to  agree 
upon  the  other  five  members  of  said  Board,  or  any  of  them,  within 
the  fifteen  days  allowed  therefor,  but  having  so  far  harmonized 


'^.v, 


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\ 


4  RAILWAY  ENGINEERS  ARBITRATION 

their  differences  as  to  submit  a  list  of  names  of  persons  deemed 
eligible  and  indicate  that  appointments  from  such  list  would  be 
acceptable  to  them; 

"Now,  therefore,  the  undersigned,  by  virtue  of  the  request 
made  and  authority  conferred  by  said  agreement,  have  selected 
and  appointed  and  do  hereby  appoint  as  the  other  five  arbitrators 
the  following  persons,  viz.:  Hon.  Oscar  S.  Straus  of  New  York, 
Dr.  Charles  R.  Van  Hise  of  Madison,  Wisconsin,  Mr.  Frederick 
N.  Judson  of  St.  Louis,  Dr.  Albert  Shaw  of  New  York,  and  Mr. 
Otto  M.  Eidlitz  of  New  York,  who  together  with  the  two  arbitra- 
tors named  by  the  respective  parties  will  constitute  the  Board 
of  Arbitration  provided  for  in  said  agreement. 

"Witness  our  hands  at  the  City  of  Washington,  D.  C,  this  8th 
day  of  June,  1912. 

(Signed)    Edward  D.  White, 

Chief  Justice  of  the  United  States. 

(Signed)    Martin  A.  Knapp, 

Presiding  Judge  Commerce  Court. 

(Signed)   Chas.  P.  Neill, 

U.  S.  Commissioner  of  Labor.'' 


MEMORANDUM  OF  AGREEMENT 

"The  parties  to  the  pending  controversy  between  the  Eastern 
Railroads,  a  list  of  which  is  hereto  annexed,  and  the  Brotherhood 
of  Locomotive  Engineers  hereby  mutually  agree  as  follows: 

"That  the  matters  in  dispute  be  submitted  to  a  Board  of  Arbi- 
tration of  seven  members  to  be  selected  and  appointed  in  the 
following  manner:  Each  of  said  parties  shall  promptly  name  one 
member  of  said  Board  and  notify  the  other  party  accordingly. 
The  two  thus  chosen  shall  meet  without  delay,  and  at  such  time 
and  place  as  they  may  arrange,  and  endeavor  in  good  faith  to 
agree  upon  the  remaining  members  of  said  Board.  But  in  case 
they  shall  fail  to  agree  upon  all  or  any  of  such  other  members  within 
fifteen  days  after  their  first  meeting  for  that  purpose,  then  such 
other  members,  or  so  many  of  them  as  have  not  been  agreed  upon, 
shall  be  named  and  appointed  by  the  Chief  Justice  of  the  United 
States,  the  Presiding  Judge  of  the  Commerce  Court  and  the  United 
States  Commissioner  of  Labor,  acting  together. 

"The  Board  so  constituted  shall  meet  as  soon  as  practicable 
after  the  membership  thereof  has  been  completed,  and  at  such 
time  and  place  as  they  may  agree  upon,  and  take  up  and  conclude 
the  hearing  of  the  parties  and  make  their  decision  or  award  with- 
out unnecessary  delay. 

"The  matters  in  dispute  to  be  submitted  to  said  Board  for  deter- 
mination are  the  requests  of  the  Engineers,  which  have  heretofore 


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RAILWAY  ENGINEERS  ARBITRATION  5 

been  submitted  to  said  roads  and  refused  by  them,  and  a  copv  of 
which  IS  annexed  hereto  and  made  a  part  hereof 

"A  majority  of  the  members  of  said  Board  shall  be  competent 
to  make  a  vahd  and  bmdmg  decision  or  award,  and  each  of  said 
parties  hereby  pledges  itself  to  accept  and  abide  by  the  decision 
or  award  made,  according  to  its  terms  and  intent,  for  the  period  of 
one  year  from  its  effective  date;  and  thereafter  subject  to  the 
usual  thirty  days'  notice. 

.  r'^^i  Board  shall  fix  the  date  when  its  decision  or  award  shall 
take  ettect,  and  may  make  the  same  retroactive  if  it  shall  seem 
just  and  proper. 

"The  necessary  expenses  of  the  Board,  including  the  compensa- 
tion and  expenses  of  its  members,  stenographers'  fees,  and  other 
joint  expenses  shall  be  divided  equally  between  the  parties  and 
one-half  thereof  paid  by  each  of  them. 

'^  Signed  at  the  City  of  New  York,  this  30th  day  of  April,  1912 
For  the  Engineers:  For  the  Railroads- 


1 

] 

I 


Warren  S.  Stone, 
W.  M.  Cadle, 
J.  M.  Watson, 
H.  A.  Kelly, 
C.  K.  Mitchell, 


J.  C.  Stuart,  Chairman, 
H.  J.  Horn, 
G.  L.  Peck, 
A.  H.  Smith, 

B.  A.  WORTHINGTON, 

Sub-Committee.'* 


RAILROADS  PARTIES  TO  THE  AGREEMENT! 

Baltimore  &  Ohio, 

Bessemer  &  Lake  Erie, 

Boston  &  Albany, 

Boston  &  Maine, 

Buffalo,  Rochester  &  Pittsburgh, 

Buffalo  &  Susquehanna, 

Central  New  England, 

Chicago,  Indianapolis  &  Louisville, 

Chicago,  Terre  Haute  &  Southeastern, 

Chicago,  Indiana  &  Southern, 

Cincinnati  Northern, 

Cincinnati,  Hamilton  &  Dayton, 

Cleveland,  Cincinnati,  Chicago  &  St.  Louis, 
Coal  &  Coke, 

Delaware  &  Hudson, 

Delaware,  Lackawanna  &  Western 

Detroit,  Toledo  &  Ironton,  ' 

Dayton  &  Union, 

Dunkirk,  Allegheny  Valley  &  Pittsburgh, 


S. 


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^  RAILWAY  ENGINEERS  ARBITRATION 

Erie, 

Grand  Rapids  &  Indiana, 

Hocking  Valley, 

Indiana  Harbor  Belt, 

Indianapolis  Union, 

Kanawha  &  IVIichigan, 

Lake  Erie  &  Western, 

Lake  Erie,  Alliance  &  Wheeling, 

Lake  Shore  &  Michigan  Southern, 

Lehigh  Valley, 

Long  Island, 

Maine  Central, 

Michigan  Central, 

New  York  Central  &  Hudson  River, 

New  York,  Chicago  &  St.  Louis, 

New  York,  New  Haven  &  Hartford, 

New  York,  Ontario  &  Western, 

New  York,  Philadelphia  &  Norfolk, 

New  York,  Susquehanna  &  Western, 

New  Jersey  &  New  York, 

Pennsylvania  Lines,  East, 

Pennsylvania  Lines,  West, 

Pere  Marquette, 

Pittsburgh  &  Lake  Erie, 

Reading  System, 

Toledo  &  Ohio  Central, 

Toledo,  St.  Louis  &  Western, 

Vandalia  Lines, 

Western  Maryland, 

Wheeling  &  Lake  Erie, 

West  Side  Belt  Line, 

Wabash  Pittsburgh  Terminal. 

REQUESTS   OF  ENGINEERS   SUBMITTED  FOR  ARBITRATION 

Passenger  rates 

Engines  with  cylinders  of  20  inches  or  less  in  diameter,  $4.40 
peflOO  miles  or  less.  Engines  with  cylinders  over  20  inches  m 
diameter,  $4.60  per  100  miles  or  less.    Miles  made  m  excess  of 

OveTtime^in  through  passenger  service  to  be  computed  on  a 
basis  of  20  miles  per  hour. 

Overtime  will  be  paid  for  at  70  cents  per  hour. 


Ill 


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RAILWAY  ENGINEERS  ARBITRATION  7 

Electric  service 

Whenever  electric  service  is  installed  or  now  in  operation  loco- 
motive engineers  will  take  the  positions  on  electric  locomotives 
or  multiple  unit  trains  under  the  prevailing  schedules  governing 
rates  of  pay  and  conditions  in  steam  service.  Any  change  from 
steam  to  electricity  or  other  motive  power  in  any  form  at  any  point 
on  the  system  such  power  will  be  maimed  by  engineers  and  paid 
according  to  the  service  for  the  territory  affected,  or  where  electric 
or  multiple  unit  trains  enter  upon  steam  tracks  or  tracks  formerly 
operated  by  steam  or  where  trackage  rights  are  leased  to  holding 
companies  they  shall  be  operated  by  engineers  operating  steam 
trains  on  said  tracks. 

Freight  rates 

Engines  with  cylinders  of  20  inches  in  diameter  or  less,  $5.25. 
Engines  with  cylinders  over  20  inches  in  diameter  and  less  than 
24  inches  in  diameter,  $5.50. 

Engines  with  cylinders  24  inches  in  diameter  and  over,  except 
Mallets,  $5.75. 

Mallet  type  of  engine,  $7.00. 

One  hundred  (100)  miles  or  less,  ten  (10)  hours  or  less  to  constitute 
a  day's  work.  All  over  one  hundred  (100)  miles  to  be  paid  pro 
rata.  Overtime  to  be  computed  on  a  basis  of  ten  (10)  miles  per 
hour,  and  paid  for  pro  rata.  Through  freight  rates  to  apply  to  all 
mine  runs,  work,  wreck,  pusher  or  helper,  milk,  roustabout  and 
circus  trains,  according  to  class  of  engines.  Overtime  to  be  com- 
puted on  minute  basis. 

Engineers  will  be  paid  at  overtime  rate  for  all  time  over  15  hours 
held  at  other  than  their  home  terminal. 

Twenty-five  (25)  cents  per  100  miles  or  less  additional  to  be 
added  to  through  freight  rates  for  local  freight  service  according 
to  class  of  engines. 

Switching  service 

Rates  for  engines  in  switching  service,  $4.50  per  day.  Ten  (10) 
hours  or  less  to  constitute  a  day's  work.  All  over  ten  (10)  hours 
to  be  paid  for  pro  rata.     Overtime  to  be  computed  on  minute  basis. 

Belt  line  service 

Engineers  in  belt  line  service  will  be  paid  $5.00  per  day,  ten 
(10)  hours  or  less  to  constitute  a  day.  All  over  ten  (10)  hours, 
50  cents  per  hour.     Overtime  to  be  computed  on  minute  basis! 

Engineers  of  single-crewed  yard  and  belt  line  engines  will  report 
for  duty  at  the  appointed  time  and  will  receive  one-half  hour's 
pay  in  addition  to  the  regular  day's  pay  for  reporting  30  minutes 
m  advance  of  the  commencement  of  the  day's  work.    In  case  of 


\/ 


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8 


RAILWAY  ENGINEERS  ARBITRATION 


double-crewed  engines,  if  engineers  do  not  relieve  each  other  at 
the  appointed  time  and  the  engineer  of  the  next  crew  is  required  to 
prepare  his  engine,  30  minutes  pay  will  be  allowed  for  same. 

Beginning  and  ending  of  a  day 

In  all  classes  of  road  service  an  engineer's  time  will  commence 
30  minutes  before  leaving  round-house  or  designated  track  and  will 
conclude  at  the  time  the  engine  is  placed  on  the  designated  track 
or  relieved  by  hostler  at  terminal. 

Initial  terminal  delay 

When  delayed  within  the  terminal  as  much  as  1  hour  beyond  the 
time  set  to  leave,  engineers  will  be  paid  1  hour's  overtime  at  over- 
time rates,  according  to  class  of  engine.  One  (1)  hour  and  thirty 
(30)  minutes  to  constitute  2  hours,  etc. 

If  road  overtime  is  made  on  same  trip  initial  overtime  will  be 
deducted. 

Final  terminal  delay 

Final  terminal  delay  will  be  paid  for  at  the  end  of  the  trip  when 
delayed  more  than  30  minutes  between  yard  limit  boards  governing 
yard  to  which  train  is  to  be  deUvered  and  the  point  of  final  relief, 
and  to  be  paid  for  at  the  overtime  rate  according  to  class  of  engine 
on  the  minute  basis. 

Hours  of  service  law 

Amendment  of  Section  E  of  the  Application  of  the  Sixteen  Hour 
Law. 

Engineers  in  train  service  tied  up  under  the  law  will  be  paid  con- 
tinuous time  from  initial  pomt  to  tie-up  point.  When  they  resume 
duty  on  continuous  trip  they  will  be  paid  from  the  tie-up  point  to 
the  next  tie-up  point,  or  to  the  terminal  on  the  basis  of  a  minimum 
day.  It  is  understood  that  this  does  not  permit  running  engines 
through  terminals  or  around  other  crews  at  terminals  unless  such 
practice  is  permitted  under  the  pay  schedule. 

It  is  imderstood  that  existing  rates  of  pay  or  better  working 
conditions  shall  not  be  reduced  by  the  rates  or  rules  hereby  agreed 
upon,  nor  shall  General  Committees  of  Adjustment  be  debarred 
from  taking  up  with  their  respective  managers  matters  not  decided 
at  this  conference. 


PRESENTATION  OF  THE  CASE 

The  Board  constituted  as  above  described  held  its  first  meeting 
in  New  York  on  Friday,  July  12.  At  this  meeting  the  Board 
organized  and  elected  Hon.  Oscar  S.  Straus  Chairman.  It  was 
agreed  that  the  hearings  should  be  held  at  the  Oriental  Hotel, 
Manhattan  Beach,  New  York,  beginning  July  15.  The  hearings 
occupied  the  following  days:  July  15,  16,  17,  18,  19,  22,  23,  24,  25, 
26  and  27.  With  the  exception  of  one  day,  sessions  were  held 
both  in  the  morning  and  in  the  afternoon. 

At  these  hearings  the  engineers  were  represented  by  Warren  S. 
Stone  and  M.  W.  Cadle.  The  railroads  were  represented  by  Wil- 
liam M.  Duncan,  B.  A.  Worthington,  0.  E.  Butterfield,  Francis  I. 
Oowen,  George  F.  Brownell  and  T.  M.  Kirby. 

The  hearings  were  opened  by  a  general  statement  of  the  case 
for  the  engineers  by  Mr.  Stone;  and  for  the  railroads,  by  Mr. 
Worthington. 

Following  these  general  statements  Mr.  Stone  called  before  the 
Board,  for  the  engineers,  the  following  twenty-five  witnesses: 
Dean  R.  Woods,  C.  B.  Galleher,  Charles  D.  Moore,  MelviUe  K. 
Packer,  F.  J.  Hughes,  F.  L.  Carr,  Arthur  J.  Fero,  Robert  F.  Jack- 
son, R.  E.  Reed,  F.  A.  Hallett,  George  E.  Hanley,  J.  W.  Smith, 
William  H.  Muir,  F.  I.  Singleton,  Henry  C.  Case,  George  Ludlam, 
Joseph  F.  Garland,  D.  J.  Keleher,  F.  A.  Edwards,  John  F.  Fagan, 
William  Daniels,  T.  F.  Walpole,  Thomas  Hurley,  J.  W.  Moyer,  and 
J.  C.  Shreve. 

The  witnesses  called  by  the  railroads  were:  B.  A.  Worthington, 
President,  Chicago  &  Alton  Railroad;  S.  A.  Bickford,  Road  Fore- 
man Electric  Equipment,  New  York  Central  &  Hudson  River 
Railroad ;  Lewis  N.  Armstrong,  Assistant  Road  Foreman  of  Engines, 
West  Jersey  &  Seashore  Division  of  the  Pennsylvania  Railroad; 
Hoag  Gilliam,  Electrical  Superintendent,  New  York,  New  Haven 

9 


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RAILWAY  ENGINEERS  ARBITRATION 


> 


^L 


and  Hartford  Railroad;  B.  R.  Pollock,  General  Superintendent 
in  charge  of  transportation,  New  York,  New  Haven  &  Hart- 
ford Railroad;  S.  S.  Haff,  Assistant  Road  Foreman  of  Engines, 
Long  Island  Railroad;  John  R.  Alexander,  Chief  Road  Foreman  of 
Engines,  East  Pennsylvania  Division,  Pennsylvania  Railroad; 
W.  W.  Atterbury,  Vice-President  in  charge  of  operation,  Pennsyl- 
vania Lines  East;  A.  M.  Schoyer,  General  Superintendent,  North- 
west system  of  Pennsylvania  Lines  West;  H.  J.  Horn,  Vice-Presi- 
dent in  charge  of  operation.  New  York,  New  Haven  and  Hartford 
Railroad  (New  Haven,  Boston  &  Maine,  and  Central  New  Eng- 
land); A.  H.  Smith,  Vice-President  in  charge  of  operation.  New 
York  Central  Lines;  A.  M.  Smith,  General  Manager,  Coal  &  Coke 
Railway;  J.  C.  Stuart,  Vice-President,  Erie  Railroad;  J.  A.McCrea, 
General  Manager,  Long  Island  Railroad;  James  McCrea,  Presi- 
dent, Pennsylvania  Railroad;  W.  L.  Hudson,  Road  Foreman  of 
Engines,  Pittsburgh  Division,  Pennsylvania  Railroad. 

In  connection  with  the  presentation  of  the  engineers'  case,  over 
eighty  exhibits  were  offered  by  Mr.  Stone.  These  consisted  of 
statements  and  statistical  tables  relating  to  wages,  rates,  accidents, 
etc.;  copies  of  the  prevailing  wage-schedules  of  engineers  on  cer- 
tain western,  southern  and  eastern  railways;  blue  prints  and  dia- 
grams of  locomotives;  application  blanks;  books  of  questions  and 
instructions  for  engineers  and  firemen;  copies  of  rules  governing 
railway  employes;  descriptive  lists  of  signals;  copies  of  time-tables 
and  official  bulletins  with  which  engineers  are  required   to   be 

familiar;  etc. 

On  behalf  of  the  railroads,  over  130  exhibits  were  submitted  to 
the  Board.  These  consisted  of  statistical  tables,  diagrams  and 
explanatory  statements  relating  to  the  earnings  and  rates  of  pay 
of  engineers  and  other  railway  employes;  the  estimated  increases, 
both  direct  and  ^'collateral,"  in  the  payrolls  of  the  railroads,  that 
would  result  from  granting  the  requests  of  the  engineers;  the 
financial  status  of  the  several  roads  involved— their  earnmgs  and 
expenditures,  etc. 


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RAILWAY  ENGINEERS  ARBITRATION 


11 


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At  the  close  of  the  testimony,  the  case  of  the  engineers  was 
summed  up  by  Mr.  Stone,  and  that  of  the  railroads  by  Mr.  Robbins 
and  Mr.  Duncan. 

Following  the  oral  presentation,  briefs  were  submitted  on  behalf 
of  the  engineers  by  Mr.  Stone;  and  on  behalf  of  the  railroads  by 
Mr.  Duncan  and  Mr.  Worthington. 

From  the  date  of  adjournment  following  the  hearings,  to  Septem- 
ber 9,  the  members  of  the  Board  spent  such  time  as  they  were  able 
to  give,  in  studying  the  evidence  and  the  statistics,  in  examining  the 
arguments  submitted,  and  in  making  independent  investigations. 

On  September  9,  the  Board  met  to  take  up  the  question  of  find- 
ings. They  were  engaged  in  this  work  from  September  9  to  14 
inclusive.  After  tentative  findings  were  made  a  report  was  drawn 
up  and  submitted  to  all  the  members  for  their  revision.  After 
such  revision  the  Board  met  again  on  October  28,  to  consider  this 
report  as  a  whole  for  final  action,  and  continued  in  session  upon  this 
work  until  November  2  inclusive. 

During  the  hearings  before  the  Board,  Mr.  Straus  acted  as  its 
chairman;  during  the  subsequent  consideration  of  the  case,  Mr. 
Van  Hise  acted  as  chairman  at  Mr.  Straus's  request. 

Mr.  C.  W.  A.  Veditz  was  the  Secretary  to  the  Board,  and 
Messrs.  Frank  H.  Dixon  and  Frank  J.  Wame  were  the  statisticians. 


MAGNITUDE  OF  THE  PROBLEM 

The  territory  covered  by  the  fifty-two*  railroads  concerned  in 
this  arbitration  comprises  the  northeastern  part  of  the  United 
States.  It  coincides  nearly  with  Groups  I,  II  and  III  of  the  terri- 
torial classification  adopted  some  years  ago  by  the  Interstate 
Commerce  Commission.  These  three  groups  are  bounded  on  the 
west  by  Lake  Michigan  and  the  Illinois-Indiana  state  line;  on  the 
north  by  Canada,  Lakes  Ontario,  Erie  and  Huron;  on  the  south  by 
the  Ohio  and  Potomac  Rivers;  and  on  the  east  by  the  Atlantic 
Ocean.  The  roads  concerned  extend,  however,  somewhat  beyond 
Group  III  to  the  west,  and  include  a  part  of  lUinois  reaching  to 
Chicago.  In  this  report  the  region  covered  by  the  fifty-two 
roads  will  be  referred  to  as  the  Eastern  District.  Groups  IV  and 
V  under  the  classification  of  the  Interstate  Commerce  Commission 
will  be  referred  to  as  the  Southern  District.  This  district  lies 
south  of  the  Potomac  and  Ohio  Rivers  and  east  of  the  Mississippi 
River.  The  remainder  of  the  country,  west  of  the  Mississippi  and 
Wabash  Rivers  and  Lake  Michigan,  which  is  comprised  in  Groups 
VI,  VII,  VIII,  IX  and  X  of  the  classification  of  the  Interstate 
Commerce  Commission,  will  be  referred  to  as  the  Western  District,  t 

•  Only  fifty-one  roads  signed  the  agreement,  but  the  statistical  tables 
submitted  by  the  railroads  generally  included  the  Central  Railroad  of  New 
Jersey,  which  did  not  sign,  but  which  is  controlled  by  the  Reading  system. 

t  The  Interstate  Commerce  Commission  has  recently  adopted  a  modifica- 
tion of  its  former  territorial  grouping,  and  now  recognizes  three  "districts" 
called  respectively  the  Eastern,  Southern  and  Western  Districts.  The  new 
Eastern  District  coincides  mainly  with  former  Groups  I,  II,  and  III,  save 
that  it  comprises  about  half  of  Illinois  that  formerly  lay  west  of  Group  III; 
this  portion  of  Illinois,  formerly  in  Group  VI,  is  no  longer  a  part  of  the  West- 
ern District. 

The  three  districts  may  now  be  defined  substantially  as  follows:  The 
Eastern  District  comprises  that  portion  of  the  United  States  bounded  on 
the  west  by  the  northern  and  western  shores  of  Lake  Michigan  to  Chicago, 
thence  by  a  line  to  Peoria,  thence  to  East  St.  Louis,  thence  down  the  Missis- 
sippi River  to  the  mouth  of  the  Ohio  River,  and  on  the  south  by  the  Ohio 
River  from  its  mouth  to  Parkersburg,  West  Virginia,  thence  by  a  line  to  the 
southwestern  corner  of  Maryland,  thence  by  the  Potomac  River  to  its  mouth. 
The  Southern  District  comprises  that  portion  of  the  United  States  bounded 

12 


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RAILWAY  ENGINEERS  ARBITRATION 


13 


In  1910  the  fifty-two  railroads  concerned  in  this  arbitration  had 
(according  to  Exhibit  5  submitted  by  the  railroads)  66,876  miles 
of  main  track,  as  compared  with  266,185  for  the  United  States  as 
a  whole,  or  25. 1  per  cent  of  the  total.  Their  operating  revenues  and 
operating  expenses  (amounting  respectively  to  $1,088,968,087  and 
$726,994,658)  were  each  nearly  40  per  cent  of  the  total  for  all 
railroads  in  the  United  States,  and  their  net  operating  revenue 
($361,973,429)  was  39  per  cent  of  the  total  for  all  the  railroads  of 
the  country.  These  fifty-two  railroads,  however,  according  to  the 
same  authority,  carried  47.3  per  cent  of  the  ton  miles,  and  42.8  per 
cent  of  the  passenger  miles,  of  all  railroads  of  the  United  States. 
Their  employes,  excluding  general  officers,  numbered  40.8  per  cent 
of  the  total;  and  the  aggregate  compensation  to  employes,  exclud- 
ing general  officers,  constituted  41.5  per  cent  of  the  total  for  the 
United  States. 

The  number  of  engineers  employed  on  the  52  Eastern  roads, 
as  reported  by  the  railroads  themselves  in  July,  1912  (Railroad 
Exhibit  4)  was  31,840.  The  aggregate  compensation  of  the 
engineers  in  the  employ  of  the  52  railroads  during  the  fiscal  year 
ending  June  30,  1911,  as  reported  by  the  railroads  in  their  Exhibit 
67A,  was  $41,874,282,  or  43.1  per  cent  of  the  total  engineers'  wages 
for  the  United  States. 


<" 


on  the  north  by  the  Eastern  District,  and  on  tHe  west  by  the  Mississippi 
Kiver.  The  remainder  of  the  United  States,  exclusive  of  Alaska  and  of 
island  possessions,  is  included  in  the  Western  District. 


; 


STATEMENT  OF  THE  PROBLEM 

THE  POSITION  OF  THE  ENGINEERS 

1.  The  engineers  ask  for  certain  uniform  rates  of  pay  and  rules, 
the  application  of  which  would  mean  varying  increases  in  compen- 
sation. 

2.  The  engineers  ask  that  these  proposed  rates  and  rules  be  put 
into  effect  regardless  of 

a.  The  varying  financial  abihty  of  the  roads  to  pay  more  wages. 

h.  The  variations  in  the  service  on  different  roads,  and  on  differ- 
ent divisions  of  the  same  road.  They  do  not  ask  that  the  same 
rate  be  paid  for  all  engineers  engaged,  but  for  all  engineers  running 
the  same  class  of  engines  in  the  same  class  of  service.  For  exam- 
ple: In  through  freight  service,  they  ask  that  all  engineers  running 
the  same  class  of  engine  shall  receive  the  same  rate,  whatever  the 
road,  and  without  regard  to  the  part  of  the  road. 

3.  The  engineers  ask  the  adoption  of  the  principle  that  they  be 
given  exclusive  right  to  operate  the  motive  power  on  the  railroads, 
whether  that  power  be  steam  or  electricity. 

4.  The  engineers  ask  for  the  introduction  of  new  rules,  and  the 
modification  of  certain  important  existing  rules  of  service,  in  such 
a  manner  as  to  standardize  them  for  all  roads  and  incidentally 
to  increase  the  pay  in  certain  instances. 

Of  the  arguments  presented  in  favor  of  the  engineers'  claims, 
the  following  are  the  more  important: 

1.  The  nature  of  the  calling,  which  involves: 

a.  Heavy  and  increasing  responsibility. 

b.  Skill  and  efliciency,  as  indicated  by  length  and  severity  of 
apprenticeship  required. 

c.  Acute  mental  strain. 

d.  An  unusual  degree  of  hazard. 

14 


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RAILWAY  ENGINEERS  ARBITRATION 


15 


e.  Relatively  limited  period  of  earning  power,  fixed  by  age  limi- 
tations and  by  numerous  efficiency  requirements. 
/.  Increasing  productivity  of  the  engineers'  services. 

2.  The  wages  of  engineers  have  not  kept  pace  with  the  wages  of 
other  classes  of  employes  in  train  service. 

3.  It  is  claimed  that  the  existing  rates  of  pay  in  the  Southern 
and  Western  Districts  are  higher,  and  the  rules  of  service  better, 
than  in  the  Eastern  District. 

4.  It  is  argued  that  in  the  Southern  and  Western  Districts  the 
wages  and  rules  of  service  are  standardized  to  a  much  greater 
extent  than  in  the  Eastern  District;  and  that  because  in  the  East- 
ern District  the  conductors  and  other  trainmen  receive  a  standard 
wage  on  all  roads,  the  same  principle  should  apply  to  the  engineers. 

THE  POSITION  OF  THE  RAILROADS 

The  railroads  hold  that  the  engineers  now  receive  not  only  fair 
but  liberal  compensation  for  work  performed;  that  the  hours  of 
duty  are  so  limited,  and  other  conditions  of  service  so  arranged, 
as  to  relieve  the  engineers,  in  the  normal  course  of  their  work,  of 
excessive  strain;  and  that  there  has  been  no  change  in  working 
conditions  since  the  last  wage-adjustment  now  requiring  a  readjust- 
ment. The  position  of  the  railroad  companies  is  summarized  in 
the  following  points  as  set  forth  in  their  brief: 

1.  Railroad  employes  are  as  well,  if  not  better  paid  than  labor 
in  other  employments. 

2.  Engineers  constitute  the  highest-paid  class  of  employes  in 
the  railroad  service. 

3.  The  1910  adjustment  of  the  engineers'  wages  was  made  sub- 
sequent to  the  adjustment  with  the  conductors  and  trainmen,  and 
practically  the  same  differential  continued  in  favor  of  the  engineers 
that  had  existed  for  a  number  of  years.  The  existing  differential 
between  the  engineers  and  other  employes  is  as  wide,  if  not  wider, 
than  is  warranted  by  the  character  of  the  service,  the  responsibili- 
ties imposed,  the  risks  assumed,  or  the  actual  labor  required. 


/ 


16 


RAILWAY  ENGINEERS   ARBITRATION 


4.  At  the  time  the  engineers'  wages  were  increased  in  1910,  full 
consideration  was  given  to  all  the  conditions  of  service  then  pre- 
vailing. 

5.  Since  that  time  there  has  been  no  increase  in  the  physical 
labor,  responsibility  or  risk  of  the  engineers;  but,  on  the  contrary, 
all  have  been  reduced  through  labor-saving  devices  or  safety 
appliances,  reheving  the  engineers  of  duties  formerly  performed 
and  of  risks  formerly  incurred. 

6.  The  services  of  the  engineers  are  not  of  greater  value  today 
than  in  1910,  measured  by  any  of  the  units  suggested  by  any  of 
the  parties. 

7.  The  vitality  and  working  period  of  the  engineers  compare 
favorably  with  that  of  other  wage  earners. 

8.  The  railroads  are  financially  unable  to  pay  increased  wages 
in  view  of  their  revenues. 


-( 


^ 


y 


I      s 


-f 


-t 


V 


DIFFICULTY  OF  THE  PROBLEM  BEFORE  THE  BOARD 

The  Board  have  before  them  on  one  side  a  request  for  an  in- 
crease in  wages  for  engineers,  including  standardization  to  a  cer- 
tain extent,  with  a  number  of  regulations  that  tend  to  increase 
wages,— this  request  being  made  because  of  the  alleged  inadequacy 
of  the  present  compensation  and  the  lack  of  uniformity  in  existing 
rates.  On  the  other  side  the  broad  assertions  are  that  existing 
compensation  is  adequate  for  the  service,  and  that  the  roads 
are  unable  to  pay  the  increases  asked.  In  making  these  asser- 
tions no  changes  are  proposed  in  existing  schedules  upon  the  part 
of  any  railroad. 

No  principle  has  been  presented  by  either  side  upon  which  the 
questions  at  issue  can  be  settled.  One  side  holds  that  the  pay 
is  inadequate;  the  other  side  asserts  that  the  pay  is  fair  and  liberal. 
Neither  gives  a  clear  principle  upon  which  this  point  can  be 
determined.  The  question  before  the  Board,  moreover,  is  not 
one  of  a  simple  advance,  but  of  many  different  advances,  involv- 
ing classifications  m  which  a  standard  wage  is  proposed  for  each 
class  of  service. 

That  for  different  sizes  of  engines  the  rates  should  differ  is 
agreed  by  both  parties,  but  there  is  no  agreement  regarding  the 
basis  of  classification  of  engines.  The  engineers  propose  a  classi- 
fication based  on  the  size  of  cylinders.  To  this  the  roads  object, 
although  upon  a  large  number  of  roads  this  is  the  prevailing  basis 
for  differences  in  rates.  The  engineers  contend  that  the  pay 
should  be  the  same  for  electric  and  steam  service,  but  the  roads 
hold  differently;  and  the  evidence  presented  to  the  Board  on  this 
subject  is  limited  and  contradictory. 

The  questions  that  confront  the  Board  are  not  those  alone  as 
to  whether  or  not  the  pay  in  any  given  case  should  be  raised; 

17 


18 


RAILWAY  ENGINEERS  ARBITRATION 


but  they  must  also  decide,  if  the  present  rate  is  found  inade- 
quate, by  what  margin  it  should  be  increased. 

Even  if  the  arbitrators  accepted  the  principle  of  standard- 
ization to  the  extent  of  treating  all  the  roads  alike,  they  still 
would  have  before  them,  not  one  question  to  decide,  but  a  score 
or  more.  If  each  road  is  to  be  considered  separately,  the  arbi- 
trators have  before  them  these  same  questions  for  each  of  the 
52  roads,  making  not  scores  but  hundreds  of  questions  to  decide. 
Only  when  these  points  are  appreciated  is  it  possible  to  grasp 
fully  the  extraordinary  complexity  of  the  problems  before  the 
Board. 

It  will  not  be  practicable  in  this  report  to  discuss  in  detail  each 
of  the  many  points  raised  by  the  parties  to  the  arbitration.  To 
do  this  would  expand  the  report  into  a  treatise.  Only  those 
points  in  the  case  will  be  discussed  which  have  had  an  impor- 
tant bearing  upon  the  findings  of  the  Board. 


n 


'< 


-( 


RESPONSIBILITY,  SKILL  AND  MENTAL  STRAIN 

OF  ENGINEERS 

The  heavy  responsibility  of  engineers,  greater  than  that  of 
any  other  class  of  employes  in  train  service,  the  skill  and  effici- 
ency required,  the  mental  strain  to  which  the  men  are  subjected, 
and  the  hazard  of  the  calling  are  all  unanimously  recognized  by 
the  Board  of  Arbitration.  Therefore  the  Board  accepts  these 
points,  brought  forward  by  the  engineers,  at  their  full  value. 

In  this  connection,  only  a  single  point  needs  further  comment. 
The  mental  strain  which  the  engineer  undergoes  in  fast  passenger 
service  is  recognized  by  the  generally  accepted  principle  that  a 
hundred  miles'  run  entitles  the  engineer  to  a  day's  wage.     To 
illustrate:  The  man  who  runs  a  locomotive  a  hundred  miles,  even 
if  this  be  done  in  two  hours  (as  occurs  in  some  cases)  receives  a 
day's  pay.    If  a  man  does  his  duty  there  is  no  question  that 
during  these  two  hours  he  must  be  in  his  best  trim,  and  that  his 
mental  faculties  must  be  on  the  alert  every  minute.    A  common 
method  of  handling  passenger  traffic  in  the  case  of  trips  approxi- 
mately a  hundred  miles  long  is  for  the  engineer  to  run  from  his 
home  terminal  and  return  within  twenty-four  hours.    The  next 
day  he  "lays  off"  and  thus  has  a  full  day  of  rest  before  another 
day  of  service.    For  the  round  trip  he  receives  two  day's  pay; 
but  he  is  in  actual  service  only  every  other  day. 

While  the  man  on  the  exceptionally  fast  passenger  train  may 
make  his  hundred  miles  in  two  hours  on  the  road,  the  man  with 
the  heavy  freight  engine,  and  a  full  train,  may  require  ten  hours 
for  the  run,  although  under  normal  conditions  he  would  not  usu- 
ally take  this  length  of  time.  In  each  case  the  hundred  miles 
is  recognized  as  a  day's  work.  Therefore,  it  seems  to  the  Board 
that  the  exceptional  strain  emphasized  regarding  certain  runs  of 

19 


i 


20 


RAILWAY   ENGINEERS  ARBITRATION 


the  fast  passenger  trains  may  be  eliminated,  since  both  for  pas- 
senger and  for  freight  service  one  hundred  miles  is  the  basis  for  a 
day's  pay  according  to  schedule.  As  clearly  pointed  out  by  Grand 
Chief  Stone,  the  engineer  does  piece  work;  when  he  works  more 
intensely,  less  time  is  required. 

In  conclusion  of  this  heading,  the  Board  agree  that  the  com- 
pensation of  the  engineers  should  be  adequate  to  cover  their 
recognized  responsibility,  skill,  efficiency,  and  the  mental  strain 
to  which  they  are  subjected. 


■< 


V 


\ 


\ 


F 


/ 


STANDARDIZATION 

While  the  word  '^  standardization"  is  not  used  in  the  articles 
submitted  for  arbitration,  the  requests  of  the  engineers  involve 
standardization  as  a  fundamental  principle. 

In  much  of  the  discussion  regarding  standardization,  the  argu- 
ments on  the  opposing  sides  have  not  fully  met,  since  the  two 
parties  have  meant  by  standardization  somewhat  different  things. 
It  is  evident  that  the  engineers  in  their  requests  for  standard- 
ization do  not  mean  the  same  pay  for  all  kinds  of  service.  Their 
requests  involve  classifications  of  service — such  as  freight  and 
passenger  service — and  sub-classifications  based  on  the  size  of 
the  engines.  Hence,  the  request  of  the  engineers  for  standard- 
ization means  that  one  road  shall  pay  the  same  as  another  road 
for  each  class  of  service  and  each  class  of  engine.  Their  requests 
also  include  a  reclassification  of  service  and  engines,  and  uni- 
formity in  the  rules  of  service.  The  engineers  ask  furthermore, 
as  they  have  in  other  cases  of  this  kind,  that  wherever  com- 
pensation is  now  higher  than  is  proposed  by  the  standard  rate, 
such  higher  rates  shall  be  maintained. 

Using  the  above  meaning  for  the  standardization  requested 
rather  than  an  absolute  definition,  the  railroads  hold  that  such 
standardization  would  take  no  account  of  the  ability  of  the 
roads  to  pay;  nor  of  the  difficulty  of  the  work  on  certain  runs 
(for  instance,  the  contrast  between  a  plain  and  mountain  divi- 
sion) ;  nor  of  the  difference  between  work  upon  roads  which  have 
a  heavy  traffic,  where  exceptional  care  must  be  exercised,  and 
roads  upon  which  the  traffic  is  light. 

The  wage  schedules  now  in  force  in  the  Eastern,  Southern  and 

Western  Districts  show  that  the  principle  of  uniformity,  with 

respect  to  certain  points,  has  been  recognized  by  all  American 

railroads. 

21 


.  ^t^'"^w;  li wi^elrfS'* N^™ 


22 


RAILWAY  ENGINEERS  ARBITRATION 


Among  these  uniform  practices  is  the  recognition  of  one  hun- 
dred miles  or  less  as  a  day^s  work.    An  engineer  whose  run  ex- 
ceeds one  hundred  miles  receives  extra  compensation.     More- 
over, if  the  run  of  a  hundred  miles  requires  more  than  a  fixed 
number  of  hours,  overtime  is  allowed.     Overtime  begins  in  through 
freight  service,  for  the  greater  part  of  the  country,  after  ten 
hours,  and  in  some  parts  after  eight  or  nine  hours.     Thus,  with 
some  variations,  we  have  the  principle,  for  the  entire  district 
concerned  in  the  arbitration,  that  a  run  of  a  hundred  miles  or 
less  constitutes  a  day's  work,  and  all  distance  beyond  one  hun- 
dred miles,  or  time  beyond  a  fixed  number  of  hours,  entitles  the 
engineer  to  additional  compensation. 

For  classes  of  service  in  which  it  is  not  easy  to  compute  mile- 
age—principally switching  service— the  minimum  ten-hour  day  is 
the  usual  basis  of  compensation,  which,  if  exceeded,  carries  com- 
pensation as  overtime. 

Another  uniform  principle  which  is  very  important,  and  which 
is  recognized  throughout  the  country,  is  that  of  seniority.  On 
any  given  division  the  rule  is  followed  that  the  choice  for  '^open 
runs''  in  either  freight  or  passenger  service  is  on  the  basis  of 
seniority,  qualifications  being  regarded.  This  rule  is  adhered  to 
rather  strictly  unless  there  is  some  very  good  reason  why  it  should 
not  apply.  The  older  and  more  experienced  men  may  gain  in- 
crease in  compensation  with  years  of  service  through  securing  the 
better  runs  under  the  principle  of  seniority. 

While  thus  in  certain  matters  uniformity  has  been  reached, 
the  facts  presented  regardin-  existing  rates  of  compensation  and 
rules  of  service  show  that  the  different  roads  vary  widely  in 
many  of  their  practices. 

The  facts  available  show  that  the  claims  of  the  engineers  for 
introducing  uniformity  into  the  Eastern  District  are  not  fully  con- 
firmed. In  many  respects  uniformity  does  not  exist  in  the  Southern 
and  Western  districts,  and  this  is  particularly  true  of  the  Western 
District.    Therefore,  the  experience  of  no  section  of  the  country 


■■■ 


RAILWAY  ENGINEERS  ARBITRATION 


23 


can  be  adduced  in  favor  of  granting  fully  the  uniformity  asked 
for  by  the  engineers.  There  is,  however,  a  much  closer  ap- 
proach to  uniformity  in  practice  in  the  Southern  District  than 
in  the  Eastern  District,  and  the  Western  District  is  interme- 
diate. In  the  Southern  District  particularly,  there  is  very  close 
approach  to  uniform  rules  for  the  beginning  and  ending  of  a 
day,  for  overtime  allowances,  and  in  the  classification  of  en- 
gines. Experience  seems  to  show  that  in  the  rules  regarding  the 
beginning  and  ending  of  a  day  and  allowances  for  overtime,  there 
is  no  necessity  for  the  great  diversity  existing  in  the  Eastern 
District,  and  therefore  the  Board  have  decided  to  take  this  into 
consideration  in  making  their  award. 

The  Board  can  find  no  adequate  reason  why  there  should  be 
complicated  differences  in  the  rates  of  compensation  for  services 
so  nearly  alike  as  slow  freight  service  and  certain  other  classes 
of  freight  service,  with  the  exception  that  the  additional  work 
involved  in  local  freight  service  appears  to  justify  a  somewhat 
higher  rate.  Therefore  the  Board  in  their  award  have  simplified 
the  classification  of  rates  of  pay  by  granting  the  same  rates  for 
several  different  kinds  of  freight  service.  They  group  into  one 
class,  so  far  as  compensation  is  concerned,  through  freight,  work, 
wreck,  pusher  and  helper,  mine  run  or  roustabout,  and  circus 
trains,  and  part  of  the  milk  train  service. 

Again  the  Board  can  find  no  reason  why  the  rules  of  service 
that  apply  when  men  are  held  away  from  their  home  terminal 
or  tied  up  under  the  sixteen-hour  law  should  not  be  the  same  on 
different  roads. 

When,  however,  it  comes  to  the  important  question  of  deciding 
that  the  rate  of  compensation  shall  be  the  same  for  a  particular 
kind  of  service  without  respect  to  road  or  division,  the  Board 
find  no  warrant  for  imposing  such  a  regulation.  In  no  part  of 
the  country  can  it  be  said  that  all  roads  without  respect  to  terri- 
tory and  without  respect  to  traffic  are  paying  precisely  the  same 
rate  of  compensation  for  the  same  class  of  service.        In  the 


< 


24 


RAILWAY  ENGINEERS  ARBITRATION 


Western  District  the  pay  is  generally  liigher  for  the  mountainous 
country  than  on  the  plains.  Running  a  locomotive  upon  a  road 
which  has  very  light  traffic  is  less  exacting  and  requires  less  con- 
stant alertness  than  on  roads  having  heavy  traffic.  These  facts 
lead  the  Board  to  hold  that  local  variations  in  the  character 
of  the  service  should  be  reflected,  to  a  reasonable  extent,  in  the 
rates  of  pay. 

Accepting  the  idea  that  it  is  impracticable  to  make  the  same 
rules  of  compensation  for  all  the  roads  and  for  all  parts  of  the 
same  road,  when  there  are  differences  in  these  respects  between 
the  different  roads,  as  well  as  between  other  roads  throughout 
the  country,  the  question  then  arises  whether  the  Board  should 
attempt  to  adjust  the  compensation  for  each  class  of  service  and 
each  kind  of  engine  for  each  of  the  roads.    Manifestly,  to  do  this 
would  be  beyond  the  ability  of  the  Board,  even  if  its  members 
took  many  months  for  this  adjudication.    This  statement  in  re- 
gard to  the  difficulties  of  taking  up  the  adjustment  of  wages  for 
each  class  of  service  on  each  of  the  roads  does  not  imply  any- 
thing regarding  the  adequacy  or  inadequacy  of  existing  rates  of 
compensation.    This  is  a  matter  that  is  discussed  later  under  the 
heading,  "The  Basis  of  a  Fair  Wage."    (See  page  47.) 


Y 


y 


THE  PROBLEM  OF  COMPENSATION  TO  CAPITAL 

Quite  as  difficult  to  solve  as  the  problem  of  determining  what 
constitutes  a  fair  wage,  is  the  companion  problem  of  determining 
what  constitutes  a  proper  return  upon  capital  invested.     For- 
tunately, however,  the  latter  problem  as  it  affects  the  railroads, 
has  received  the  attention  of  the  Interstate  Commerce  Commis- 
sion on  several  occasions;  and  Bulletin  No.  21  of  the  Census 
Bureau  on  "Commercial  Valuation  of  Railway  Operating  Prop- 
erty, 1904,''  contains  suggestive  information  regarding  the  rates 
of  return  that  have  in  fact  been  obtained  for  the  securities  of 
American  railroads.     In  Spokane  v.  Northern  Pacific  Railway 
Company,    15   Interstate   Commerce   Commission   Report   376, 
dated  February  9,  1909,  while  the  Commission  do  not  state  what 
they    consider  a  just    rate    of    return,    they    indicate    that    it 
should  be  considerably  more  than  4  per  cent  in  order  that  "rail- 
road development  keep  pace  with   industrial   and   commercial 
requirements." 

While  it  is  not  clear  that  the  compensation  which  goes  to  capi- 
tal is  adequate  for  each  of  the  52  roads  in  question,  it  appears 
at  the  present  time  that  the  stronger  roads  are  able  to  pay  the 
interest  on  their  bonds,  and  to  give  an  adequate  return  on  the 
capital  stock.  They  have  been  able  also  to  put  back  into  the 
property  large  sums  for  additions  and  betterments.  In  some 
cases  the  amount  put  back  into  the  roads  has  been  very  large. 
The  President  of  the  Pennsylvania  Railroad,  for  instance,  testified 
before  the  Commission  in  the  recent  eastern  rate  advance  case, 
that  since  1887  this  company  had  expended  upon  its  property  from 
its  earnings  $262,000,000,  and  that  during  the  last  ten  years  these 
expenditures  had  been  approximately  $110,000,000.  As  Com- 
missioner Prouty  added,  in  his  opinion  (No.  1508)  in  that  case: 
"The  company  has  recently  provided  passenger  terminal  facilities 

25 


28 


RAILWAY   ENGINEERS   ARBITRATION 


in  New  York  City  at  the  expense  of  something  over  $100,000,- 
000;  but  we  do  not  understand  that  any  considerable  part  of  the 
above  expenditures  from  income  has  gone  into  this  item.  During 
this  time  dividends  averaging  at  least  6  per  cent  per  annum  have 
been  paid.  The  annual  average  market  price  of  the  stock  has  been 
from  153  to  119  per  cent  of  par.  It  is  plain  that  in  the  past  the 
returns  to  this  property     ....     have  been  munificent." 

Regarding  the  New  York  Central  Railroad,  this  company  owns 
all  or  nearly  all  of  the  stock  of  many  other  companies.  Among 
these  perhaps  the  more  important  are  the  Lake  Shore  and  Michi- 
gan Southern  and  the  Michigan  Central  Railroad  companies. 
Commissioner  Prouty,  in  discussing  the  income  of  this  road, 
makes  the  following  statement: 

''The  capital  stock  contains  $57,000,000  par  value  for  which 
nothing  was  ever  paid.  The  dividends  paid  upon  this  capital 
stock  for  the  last  forty  years  will  probably  average  6  per  cent. 
During  that  time  there  has  been  actually  paid  in  dividends  to 
the  holders  of  this  $57,000,000  of  stock  at  least  $120,000,000. 
Had  the  New  York  Central  and  Hudson  River  Company  invested 
them  in  its  property,  the  funded  debt  of  that  company  might 
have  been  reduced  by  $120,000,000,  not  having  reference  to  in- 
terest. If  account  be  taken  of  interest,  the  amount  would  be 
much  larger. 

"The  company  has,  therefore,  as  a  result  of  this  transaction, 
a  capital  stock  of  $57,000,000,  in  excess  of  what  it  would  be  and 
either  a  funded  debt  or  a  capital  stock  at  least  $120,000,000 
greater  than  would  be  the  case  if  the  original  issue  of  stock  had 
never  been  made. 

"This  commission,  in  determining  what  the  New  York  Central 
system  shall  earn,  must  take  that  system  as  it  finds  it.  It  can- 
not reduce  its  capital  stock  by  $57,000,000,  nor  can  it  take  from 
the  holders  of  its  present  capital  securities  $120,000,000,  which 
have  been  paid  in  the  way  of  dividends  upon  this  stock."* 

*  Interstate  Commerce  Commission,  no.  3400,  page  302. 


f 


RAILWAY  ENGINEERS  ARBITRATION 


27 


/ 


Regarding  the  Baltimore  and  Ohio  Railroad,  the  Interstate 
Commerce  Commission, — while  expressing  no  opinion  concerning 
the  relation  between  the  value  and  the  capitalization  of  the  Com- 
pany— states  that  this  Company  "has  in  the  last  eleven  years 
paid  the  interest  upon  its  funded  debt,  the  dividend  of  4  per 
cent  upon  its  preferred  stock,  and  the  following  dividends  upon 
its  common  stock: 

1900,4  per  cent;  1901,  2  per  cent;  1902,  4  percent; 
1903,  4  per  cent;  1904,  4  per  cent;  1905,  4f  per  cent; 
1906,  5i  per  cent;  1907,  6  per  cent;  1908,  6  per  cent; 
1909,  6    per  cent;  1910,  6  per  cent." 

The  Company  also  paid  6  per  cent  on  its  common  stock  in 
1911  and  1912. 

The  complexity  of  the  problem  of  determining  whether  the 
railroads  are  able  or  unable  to  devote  an  increased  share  of  their 
income  to  higher  wages  for  their  employes  is  illustrated  by  the 
question:  What  rate  of  return  should  be  allowed  on  capital? 
It  seems  plain  that  no  fixed  percentage  can  be  named.  If  this 
were  done,  there  would  be  no  strong  incentive,  when  a  road  once 
reached  the  degree  of  efficiency  requisite  to  give  this  percentage 
of  interest,  to  a  further  increase  of  efficiency  and  economy.  But 
competition  in  this  respect  should  not  be  eliminated;  and  if  it  is 
to  be  encouraged,  great  care  will  have  to  be  taken  not  to  limit 
too  closely  the  dividends  on  the  stocks  of  roads  which  are  man- 
aged with  exceptional  efficiency.  Commissioner  Lane  in  the 
Western  rate  advance  case,  decided  February  22,  1911,  gave  it 
as  his  opinion  that  "Some  method  must  be  found  under  which 
a  carrier  by  its  own  efficiency  of  management  shall  profit.  A 
premium  must  be  put  upon  efficiency  in  the  operation  of  the 

American  railroad Society  should  not  take  from 

the  wisely  managed  railroad  the  benefits  which  flow  from  the 
foresight,  skill,  and  planned  cooperation  of  its  working  force."* 

Accepting  the  soundness  of  this  view,  the  Board  do  not  feel 
warranted  in  passing  an  opinion  regarding  the  limit  to  a  rea- 
♦  Interstate  Commerce  Commission,  no.  3500,  page  334. 


mmm 


28 


RAILWAY  ENGINEERS  ARBITRATION 


RAILWAY  ENGINEERS  ARBITRATION 


29 


sonable  dividend  which  should  be  paid  upon  capital,  as  a  matter 
of  determined  principle.  The  consideration  by  the  Interstate 
Commerce  Commission  of  the  general  cases  for  the  advance  of 
rates  east  and  west,  make  it  clear  that  they  regard  as  reasonable 
an  income  sufficient  to  pay  interest  on  the  bonds  at  the  current 
rate,  a  fair  dividend  upon  the  stock  which  represents  substance, 
and  to  provide  a  proper  surplus.* 

Furthermore,  it  appears  from  the  facts  presented  to  the  Inter- 
state Commerce  Commission  that  the  larger  systems  in  the  East- 
ern District  especially  discussed  by  them  were  receiving  incomes 
adequate  to  pay  these  amounts  and  to  allow  considerable  sums 
for  additions  and  betterments  and  for  surplus.  Even  if  this 
be  true  of  the  stronger  and  more  prosperous  roads,  it  gives  no 
information  regarding  the  financial  condition  of  the  other  roads 
in  the  district. 

INTERCORPORATE  RELATIONSHIPS 

Connected  with  the  very  important  matter  of  dividends  is 
that  of  the  intercorporate  relations  of  the  roads  involved.  While 
there  are  listed  in  this  arbitration  52  separately  named  roads, 
a  large  number  are  controlled  by  a  comparatively  small  number 
of  "systems.*'  This  control  is  exercised  most  largely  through 
the  ownership  of  a  majority  of  stock,  but  also  through  lease, 
capital  advanced,  and  voting  trust.  Of  the  52  roads,  the  New 
York  Central  and  Hudson  River  controls  13,  directly  and  indi- 

*  See  Report  Interstate  Commerce  Commission,  no.  3400,  February  22 
1911,  pages  271-2  as  follows:  ,  ua  y  ^^, 

"Then,  too,  a  railroad  must  be  allowed  to  accumulate  a  surplus  in  good 
years  which  will  offset  bad  years,  and  if  its  financial  position  is  to  be  a 
reasonably  strong  one,  that  surplus  must  be  large  enough  to  remove  doubt 
from  the  mind  of  the  investing  public.  We  think  that  a  railroad  in  ordi- 
nary years  should  be  permitted  to  show  a  substantial  surplus,  over  and 
above  the  payment  of  a  reasonable  dividend.  This  is  necessary  to  provide 
for  interest  on  capital  invested  in  improvements  which  will  not  yield  an 
immediate  return,  to  take  care  of  the  element  of  obsolescence,  and  to  tide 
over  years  of  depression.  The  amount  of  this  surplus,  if  estimated  in 
comparison  with  the  dividend  to  stockholders,  must  depend  upon  the  rela- 
tion between  stock  and  bonds  and  between  value  and  capitalization." 


'    w   ► 


rectly,  and  has  joint  control  (that  is,  the  ownership  of  a  majority 
of  the  stock  or  of  the  capital  advanced  is  shared  with  another 
road  or  other  roads)  over  three  others.    The  New  York  Central 
controls  directly,  through  lease,  the  Boston  and  Albany,  and 
through  the  ownership  of  at  least  a  majority  of  their  stock,  the 
Dunkirk,  Allegheny  Valley  and  Pittsburgh;  the  Michigan  Central; 
and  the  Lake  Shore  and  Michigan  Southern.    The  Michigan 
Central  and  the  Lake  Shore  and  Michigan  Southern  jointly  con- 
trol the  Chicago,  Indiana  and  Southern,  and  the  Indiana  Harbor 
Belt.    Through  ownership  of  a  majority  of  the  stock,  the  Lake 
Shore  and  Michigan  Southern  controls  directly  the  Cleveland, 
Cincinnati,  Chicago  and  St.  Louis;  the  Lake  Erie,  Alliance  and 
Wheeling;  the  Lake  Erie  and  Western;  the  Toledo  and  Ohio 
Central;  the  New  York,  Chicago  and  St.  Louis;  and  the  Pitts- 
burgh and  Lake  Erie.    In  addition,  the  Lake  Shore  and  Michigan 
Southern  owns  44.7  per  cent  of  the  stock  of  the  Kanawha  and 
Michigan  (an  equal  amount  being  owned  by  the  Chesapeake  and 
Ohio)  and  21.7  per  cent  of  the  stock  of  the  Reading  Company. 
The  Cleveland,  Cincinnati,  Chicago  and  St.  Louis  owns  a  majority 
of  the  stock  of  the  Cincinnati  Northern;  it  exercises  joint  control, 
with  the  Cincinnati,  Hamilton  and  Dayton,  over  the  Dayton 
and  Union;  with  the  Pittsburgh,  Cincinnati,  Chicago  and  St.  Louis, 
and  the  Vandalia,  it  controls  the  Indianapolis  Union  through  the 
advance  of  capital. 

The  Pennsylvania  Railroad  heads  another  "system."  It  con- 
trols, directly  and  indirectly,  6  others  of  the  52  roads.  Those 
directly  controlled  are  the  Pennsylvania  Company;  the  New  York, 
Philadelphia  and  Norfolk;  and  the  Long  Island.  The  Pennsyl- 
vania Company  owns  a  majority  of  the  stock  of  the  Vandalia 
and  the  Grand  Rapids  and  Indiana.  The  Pittsburgh,  Cincinnati, 
Chicago  and  St.  Louis,  which  is  also  controlled  by  the  Pennsyl- 
vania, but  which  is  not  specifically  mentioned  as  one  of  the  roads 
in  this  arbitration,  has  a  claim  to  40  per  cent  and  the  Vandalia 
to  20  per  cent  of  the  capital  advances  to  the  Indianapolis  Union. 


:s^SSH^SW 


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30 


KAILWAY  ENGINEERS  ARBITRATION 


In  addition,  the  Pennsylvania  Company  owns  2.3  per  cent  of  the 
stock  of  the  New  York,  New  Haven  and  Hartford,  and  8.7  per 
cent  of  the  stock  of  the  Baltimore  and  Ohio  Railroad.  The  Penn- 
sylvania Railroad  itself  owns  9.4  per  cent  of  the  Baltimore  and 
Ohio  stock. 

The  New  York,  New  Haven  and  Hartford  "system'*  controls 
4  others  of  the  52  roads,  2  of  them  directly— the  Central  New 
England  and  the  New  York,  Ontario  and  Western.  Through  the 
Boston  Railroad  Holding  Company,  a  majority  of  whose  stock 
it  owns,  the  New  Haven  controls  the  Boston  and  Maine,  and 
through  the  Boston  and  Maine  indirectly  also  the  Maine  Central. 
The  Baltimore  and  Ohio  "system''  controls,  through  a  voting 
trust,  the  Cincinnati,  Hamilton  and  Dayton,  and  through  the 
latter  the  Da>i:on  and  Union. 

The  Erie  "system"  controls  the  New  Jersey  and  New  York 
and  the  New  York,  Susquehanna  and  Western. 

The  Reading  "system"  controls  the  Philadelphia  and  Reading 
Railway  and  the  Central  Railroad  of  New  Jersey. 

Others  of  the  52  roads  involved  in  the  arbitration  that  are 
controlled  by  roads  or  systems  are  the  Hocking  Valley,  controlled 
by  the  Chesapeake  and  Ohio,  which  latter,  we  have  seen,  also 
controls  44.7  per  cent  of  the  Kanawha  and  Michigan;  and  the 
Chicago,  Indianapolis  and  Louisville,  which  is  controlled  jointly 
by  the  Southern  Railway  and  the  Louisville  and  Nashville. 

This  intercorporate  relationship  among  the  52  roads  is  still 
further  extended  by  the  so-called  "systems"  owning  stock  of 
other  "systems."  The  most  conspicuous  illustration  of  this  is 
the  case  of  the  Reading.  This  company  owns  100  per  cent  of 
the  stock  of  the  Philadelphia  and  Reading  Railway  and  52.8  per 
cent  of  the  stock  of  the  Central  Railroad  of  New  Jersey.  Of 
the  stock  of  the  Reading  Company,  2L7  per  cent  is  owned  by  the 
Baltimore  and  Ohio  and  an  equal  amount,  2L7  per  cent,  by  the 
Lake  Shore  and  Michigan  Southern,  90.6  per  cent  of  whose  stock 
is  in  turn  owned  by  the  New  York  Central.     Thus  two  "systems" 


RAILWAY  ENGINEERS  ARBITRATION 


'    I 


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31 


—the  New  York  Central  and  the  Baltimore  and  Ohio— control 
43.4  per  cent  of  the  stock  of  the  Reading  "system."  The  Balti- 
more and  Ohio  "system,"  in  turn,  has  8.7  per  cent  of  its  stock 
owned  by  the  Pennsylvania  Company  and  9.4  per  cent  by  the 
Pennsylvania  Railroad,  thus  giving  to  the  Pennsylvania  "sys- 
tem" control  over  18.1  per  cent  of  the  stock  of  the  Baltimore 
and  Ohio  "system."  The  Pennsylvania  Company  owns  2.3  per 
cent  and  the  New  York  Central,  0.09  per  cent,  of  the  stock  of 
the  New  York,  New  Haven  and  Hartford.  There  are  also  in- 
stances of  these  "systems"  owning  stock,  although  only  to  a 
very  slight  degree,  in  the  so-called  "independent"  roads  involved 
in  this  arbitration,  such  as  the  Central  Railroad  of  New  Jersey 
owning  0.06  per  cent  of  the  stock  of  the  Lehigh  Valley. 

Thus,  leaving  out  of  consideration  the  Wabash  Pittsburgh  Ter- 
minal, the  Wheeling  and  Lake  Erie,  and  the  West  Side  Belt, 
which  are  in  the  hands  of  receivers,  only  12  of  the  52  roads  are 
without  the  control  of  other  roads  or  systems— are  what  might 
be  called  "independent."  These  twelve  roads  are:  The  Bessemer 
and  Lake  Erie;  the  Delaware  and  Hudson;  the  Delaware,  Lacka- 
wanna and  Western;  the  Lehigh  Valley;  the  Western  Maryland; 
the  Coal  and  Coke;  the  Buffalo,  Rochester  and  Pittsburgh;  the 
Buffalo  and  Susquehanna;  the  Chicago,  Terre  Haute  and  South- 
eastern; the  Detroit,  Toledo  and  Ironton;  the  Pere  Marquette; 
and  the  Toledo,  St.  Louis  and  Western. 

The  roads  controlled  by  other  roads  operate  22,700  miles,  or 
46  per  cent  of  the  total  mileage  of  49,286. 

The  New  York  Central  "system"  controls  12,402  miles,  or  25 
per  cent  of  the  total  concerned,  including  its  own  mileage  of 
3,299  miles. 

The  New  Haven  "system"  controls  6,328  miles,  or  13  per  cent 
including  its  own  mileage  of  2,040  miles. 

The  Pennsylvania  "system"  controls  10,361  miles,  or  21  per 
cent,  including  its  own  mileage  of  5,323  miles. 

The  Baltimore  and  Ohio  controls  5,481  miles,  or  11  per  cent, 
including  its  own  mileage  of  4,434  miles. 


^ 


32  RAILWAY  ENGINEERS  ARBITRATION 

.The  Reading  System  controls  2,079  miles,  or  4  per  cent. 

The  Erie  Railroad  controls  2,399  miles,  or  5  per  cent  including 
its  own  mileage  of  2,128  miles. 

The  large  railroad  "systems"  therefore  control  lines  aggregating 
39,050  miles,  or  79  per  cent  of  the  49,286  miles  concerned  in  the 
present  controversy. 

Smnmarizing  the  above  facts  regarding  the  intercorporate  rela- 
tions of  the  52  railroads  involved  in  the  arbitration  proceedings, 
it  appears  that  of  the  total  mileage  concerned,  the  percentage 
owned  and  controlled  by  the  different  systems  is  as  follows: 

Per  cent 

The  New  York  Central [ 25 

The  New  Haven 13 

The  Pennsylvania 21 

The  Baltimore  &  Ohio H 

The  Reading 4 

The  Erie ][[[[  5 

These  six  systems  control 79 

The  mileage  of  the  "independent"  roads  is  as  follows: 

Miles 

Bessemer  &  Lake  Erie 209 

Buffalo  &  Susquehanna 356 

Buffalo,  Rochester  &  Pittsburgh 573 

Chicago,  Terre  Haute  &  Southeastern 320 

Coal  &  Coke igg 

Delaware,  Lackawanna  &  Western 957 

Delaware  &  Hudson 1,030 

Detroit,  Toledo  &  Ironton 441 

Lehigh  Valley 1,381 

Pere  Marquette 2,328 

Toledo,  St.  Louis  &  Western 451 

Western  ^Maryland 575 

Total 8,819 

The  prosperous  "independent"  roads  own  8  per  cent  of  the  total 
mileage  involved.  These  are:  The  Bessemer  and  Lake  Erie,  the 
Buffalo,  Rochester  and  Pittsburgh,  the  Delaware  and  Hudson,  the 
Lackawanna,   and  the  Lehigh  Valley.     The  three  independent 


'< 


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RAILWAY  ENGINEERS  ARBITRATION  33 

roads  that  are  bankrupt  or  in  a  receivership  own  6  per  cent.     The 
remaining  roads  own  approximately  6  per  cent. 

The  "systems"  and  the  roads  controlled  by  them,  together  with 
their  minority  holdings  in  other  roads  and  "systems,"  are  pre- 
sented in  the  following  table.  Where  the  per  cent  of  stock  owned 
is  less  than  50  per  cent  it  is  to  be  assumed  that  no  control  is  exer- 
cised. 

PcT  cent  of 
Name  of  Road  control 

New  York  Central  &  Hudson  River 

Boston  &  Albany* 

Dunkirk,  Allegheny  Valley  &  Pittsburgh 90 . 7 

Michigan  Central 89 . 8 

Chicago,  Indiana  &  Southern 15.0 

Indiana  Harbor  Belt  (a) 30. 0 

Lake  Shore  &  Michigan  Southern 90. 6 

Chicago,  Indiana  &  Southern 85 . 0 

Indiana  Harbor  Belt  (a) 30 . 0 

Lake  Erie,  Alliance  &  Wheeling 100 . 0 

Toledo  &  Ohio  Central lOO .  0 

New  York,  Chicago  &  St.  Louis, [  5o"  1 

Pittsburgh  &  Lake  Erie 50 . 0 

Kanawha  &  Michigan 44 . 7 

Lake  Erie  &  Western 50 . 0 

Chicago,  Terre  Haute  &  Southeastern 00 . 1 

Cleveland,  Cincinnati,  Chicago  &  St.  Louis. . .  52.5 

Cincinnati  Northern 56 . 9 

Dayton  &  Union 45 .  Q 

Indianapolis  Union  (b) 40 . 0 

Reading  Company 21.7 

New  York,  New  Haven  &  Hartford 00 !  9 

Pennsylvania  Railroad 

New  York,  Philadelphia  &  Norfolk 99 . 7 

Long  Island 55  g 

Pennsylvania  Company loO .  0 

Grand  Rapids  &  Indiana 51.2 

Vandalia 79 . 6 

Indianapolis  Union  (6) 20 . 0 

Baltimore  &  Ohio g '  7 

New  York,  New  Haven  &  Hartford ..........     2.3 

Baltimore  &  Ohio 9,4 

*  Control  is  through  lease. 

(c)  Twenty  per  cent  of  the  stock  of  the  Indiana  Harbor  Belt  is  also 
controlled  by  the  Chicago,  Milwaukee  &  St.  Paul  and  20  per  cent  by  the 
Chicago  &  Northwestern,  neither  of  which  roads  are  parties  to  the  arbi- 
tration. 


-H 


-^ 


'I 


34  RAILWAY  ENGINEERS  ARBITRATION 

Per  cent  of 
Name  of  Road  control 

New  York,  New  Haven  &  Hartford 

Central  New  England 98 . 7 

New  York,  Ontario  &  Western 50. 1 

Boston  Railroad  Holding  Company 90 . 7 

Boston  &  Maine 53 . 6 

Maine  Central 50 . 5 

Baltimore  &  Ohio 

Cincinnati,  Hamilton  &  Daytonf 

Dayton  &  Union 53 . 0 

Reading  Company 21.7 

Erie 

New  Jersey  &  New  York  (c) 82 . 5 

New  York,  Susquehanna  &  Western 98 . 4 

Reading  Company 

Philadelphia  &  Reading  Railway 100.0 

Central  Railroad  of  New  Jersey 52 . 8 

Lehigh  Valley 00.06 

Chesapeake  &  Ohio  (d) 

Hocking  Valley 80 . 3 

Kanawha  &  Michigan 44 . 7 

Southern  Railway  (e) 
Louisville  &  Nashville  (e) 
Chicago,  Indianapolis  &  Louisville 87 . 0 

In  addition  to  the  intercorporate  relationships  as  determined 
by  stock  ownership,  lease,  capital  advanced,  and  voting  trust 
there  is  a  system  of  interlocking  directorates.  The  same  men, 
by  acting  as  directors  upon  more  than  one  road,  may  thus  establish 
a  close  relationship  among  many  of  the  roads  in  the  Eastern 
District. 

t  Voting  trust  control. 

(6)  Capital  advanced.  The  Pittsburgh,  Cincinnati,  Chicago  &  St. 
Louis,  one  of  the  Pennsylvania  Railroad's  lines,  has  40  per  cent  of  the 
capital  advanced  to  the  Indianapolis  Union. 

(c)  One-half  per  cent  of  the  stock  of  the  New  Jersey  &  New  York  is 
owned  by  the  Delaware  &  Hudson. 

(d)  Not  a  party  to  the  arbitration  and  not  in  the  "Eastern"  District. 

(e)  Not  a  party  to  the  arbitration.  The  two  control  jointly  the  87 
per  cent. 


( 


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RAILWAY  ENGINEERS  ARBITRATION 


35 


As  illustrating  the  extent  of  these  interlocking  directorships,  it 
is  known  that  fourteen  prominent  individuals  hold  sixty-seven 
directorships  in  twenty-seven  different  roads  in  the  Eastern  Dis- 
trict. 

While  the  twelve  roads  listed  as  independent  are  nominally  so, 
the  officials  and  directors  of  some  of  them  are  identified  in  simi- 
lar capacities  with  some  of  the  great  "systems"  already  named. 

It  is  clear  to  the  Board  that  from  the  point  of  view  of  the  pres- 
ent arbitration,  ''systems"  should  be  considered  rather  than  the 
individual  elements  of  the  system,  for  their  relations  and  busi- 
ness are  so  interwoven  that  even  if  a  unit  of  the  system  considered 
by  itself  is  unprofitable,  taken  in  connection  with  the  whole  sys- 
tem it  might  be  profitable,  since  it  may  be  a  valuable  feeder 
to  a  large  road  and  furnish  business  which  has  a  long  haul  over 
such  a  system. 

This  being  the  case,  any  award  should  clearly  apply  to  these 
systems, — about  80  per  cent  of  the  mileage  of  the  roads  concerned; 
and  if  exceptions  are  made  they  should  be  limited  to  roads 
included  in  the  remaining  20  per  cent.  If  these  roads,  some  of 
which  are  weak,  were  parts  of  a  larger  system,  or  the  mileage  of 
the  Eastern  District  were  operated  as  a  unit,  the  question  would 
not  arise  regarding  exceptional  consideration  of  these  roads,  since 
they  would  act  as  valuable  feeders  to  the  larger  roads.  Further, 
while  these  independent  roads  do  not  have  official  corporate 
relationships  to  the  larger  systems,  as  a  matter  of  fact  the  stock 
in  them  is  to  a  considerable  extent  owned  by  the  same  group  of 
financial  interests  which  control  the  larger  roads  in  the  region. 

The  courts  have  declared  in  various  cases,  in  administering 
the  receivership  of  railroads,  that  the  public  safety  is  the  para- 
mount consideration,  and  that  a  railroad's  financial  embarrass- 
ments not  only  do  not  warrant  reducing  the  pay  of  employes 
below  what  was  paid  before  the  receivership,  but  have  ordered 
the  receivers  to  pay  the  "going"  rate  of  wages  for  the  different 
classes  of  employes. 


W 


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36 


RAILWAY  ENGINEERS  ARBITRATION 


Therefore,  considering  all  the  facts,  the  Board  cannot  recog- 
nize the  smallness  and  weakness  of  the  roads  as  a  controlling 
factor  in  fixing  wages.  The  Board  believe  that  the  proper  policy 
is  rather  to  consider  the  character  of  the  service  without  respect 
to  ownership,  and  regardless  of  whether  we  have  to  do  with  strong 
roads,  with  minor  branches  of  a  large  system,  or  with  small  inde- 
pendent roads.  If  because  of  the  meager  traffic  at  any  place  the 
work  of  the  engineer  is  either  physically  or  mentally  easier  than  it 
is  upon  the  trunk  lines,  there  is  adequate  reason  for  considering  this 
factor,  but  not  on  account  of  the  smallness  of  the  road.  In  short, 
the  Board  hold  to  the  view  that  the  nature  of  the  service  rendered 
is  the  paramount  factor,  and  that  if  any  standardization  takes 
place,  the  fact  must  be  recognized  that  where  there  is  greater 
responsibihty  or  greater  strain  there  should  be  larger  pay,  and 
this  without  respect  to  whether  the  division  operated  belongs 
to  a  large  system,  or  is  controlled  by  a  large  system,  or  is  inde- 
pendent. 

Indeed,  both  the  railroads  and  engineers  recognize  this  prin- 
ciple by  providing  for  a  greater  compensation  on  Mallet  engines 
than  on  consolidation  engines,  and  greater  on  the  consolidation 
than  on  the  lighter  locomotives.  If  this  principle  be  recognized 
with  reference  to  the  size  of  the  engines,  the  Board  can  see  no 
reason  why  it  should  not  be  recognized  as  between  mountainous 
and  level  country,  or  should  not  be  recognized  regarding  differ- 
ences in  the  lightness  and  ease  of  service.  Whatever  standardi- 
zation is  attempted  by  the  Board  will  therefore  be  by  classifica- 
tion of  service  rather  than  by  classification  of  roads. 

The  Board  have  therefore  decided  to  make  their  awards  apply 
generally  without  reference  to  individual  roads. 

ABILITY    OF    THE    ROADS    TO    PAY    INCREASED    COMPENSATION 

While  the  foregoing  statement  indicates  that  under  existino- 
conditions  and  wages,  the  majority  of  the  roads  are  able  to  pay 
a  fair  return  on  the  capital  invested,  this  does  not  answer  the 


'C 


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RAILWAY  ENGINEERS  ARBITRATION 


37 


question  whether  the  roads  would  be  able  to  continue  doing  so 
if  the  proposed  increase  of  compensation  were  granted.  Even 
under  existing  rates  of  wages,  the  railroads  have  raised  the  ques- 
tion of  a  general  increase  in  rates,  both  in  the  east  and  in  the 
west.  (See  Interstate  Commerce  Commission,  Cases  3400  and 
3500;  Opinions  1508  and  1509.)  The  Interstate  Commerce  Com- 
mission did  not  allow  the  increases  asked.  This  being  the  situ- 
ation, the  railroads  cannot  expect  materially  to  increase  their  income 
except  by  an  increase  in  traffic. 

It  is  fully  understood  that  upon  the  average,  there  will  be  an 
increase  in  traffic;  but  in  judging  of  such  increase  through  the 
coming  years,  it  is  necessary  to  consider  a  series  of  years,  since 
there  are  great  variations  in  income  from  year  to  year. 

The  extent  to  which  the  operating  revenues  of  the  Eastern 
Railroads  (in  Groups  I,  II,  and  III  of  the  Interstate  Commerce 
Commission)  have  varied  from  1897  to  1911  is  shown  on  page  38. 

This  table  shows  that  for  the  Eastern  District  as  a  whole  there 
has  been  an  increase  in  the  net  operating  revenue.  The  increase 
for  1911  as  compared  with  1897  was  68  per  cent. 

In  calculating  the  increases  in  income  that  will  result  from 
increases  in  traffic,  a  period  of  several  years  should  be  considered. 
The  roads  assert  that  their  present  income  is  no  more  than  is 
necessary  to  meet  fixed  charges,  including  therein  the  main- 
tenance and  transportation  accounts,  compensation  of  employes 
during  the  year,  interest  on  funded  debt,  fair  dividends  upon 
the  stock,  and  a  reasonable  surplus. 

To  what  extent  the  transportation  and  maintenance  accounts 
may  be  diminished  by  increased  economies,  illustrated  by  reduced 
costs  of  transportation  and  equipment,  is  a  very  important  factor 
regarding  which  the  Board  are  unable  to  reach  any  conclusion. 

Regarding  the  contention  of  the  roads  that  only  a  fair  rate  of 
dividend  is  paid  upon  their  stocks,  and  that  24.5  per  cent  of  the 
stocks  of  the  Eastern  roads  did  not  pay  any  dividends  at  all  in 
1911  (a  point  upon  which  the  arbitrators  express  no  opinion), 
it  may  be  remarked  (1)  that  the  percentage  of  American  rail- 


i 


38 


RAILWAY  ENGINEERS  ARBITRATION 


Table  1— Variations  in  Revenue  of  Operating  Railroads  in  Groups  I,  II 
and  III  (Rail  Operations)  for  the  Years  1897  to  1911 


TEAR 

OPKRATINQ 

OPERATING 

NET  OPERATING 

NET  OPERATING 

BEVENCE8 

EXPENSES 

REVENUE 

REVENUE  PER  MILE* 

1897 

$531,738,780 

$362,945,269 

$168,793,511 

$3,252 

1898 

570,357,302 

386,874,820 

183,482,482 

3,496 

1899 

593,261,427 

400,476,614 

192,784,813 

3,643 

1900 

677,892,142 

452,197,832 

225,694,310 

4,217 

1901 

709,990,356 

476,433,048 

233,557,308 

4,343 

1902 

763,029,037 

513,700,642 

249,328,395 

4,597 

1903 

847,313,435 

583,653,693 

263,659,742 

4,790 

1904 

873,678,276 

615,980,209 

257,698,067 

4,598 

1905 

915,240,636 

635,054,801 

280,185,835 

4,952 

1906 

1,013,949,012 

691,445,885 

322,503,127 

5,607 

1907 

1,107,437,169 

769,661,507 

337,775,662 

5,818 

1908t 

1,040,494,592 

741,727,284 

298,765,648 

5,173 

1909t 

1,030,268,495 

704,521,412 

325,747,083 

5,624 

1910t 

1,175,253,326 

795,162,236 

380,091,090 

6,541 

191  It 

1,213,660,256 

863,211,897 

350,448,359 

5,472 

*  Includes  only  single  track  mileage. 

t  Includes  outside  operations  and  excludes  switching  and  terminal 
companies. 

Explanatory  Note:  Operating  revenues  include  revenue  from  freight 
and  passenger  traffic,  from  carrying  mail  and  express,  and  from  miscel- 
laneous sources.  Operating  expenses  include  all  the  costs  of  maintaining 
track  and  equipment,  operating  trains,  securing  traffic,  and  of  adminis- 
tration. Net  operating  revenue  is  the  balance  of  total  operating  revenues 
after  the  payment  of  operating  expenses.  The  above  table  does  not  include 
income  or  charges  other  than  those  included  under  the  word  "operating"  as 
above  defined. 

way  stocks  upon  which  dividends  have  been  paid  is  steadily 
increasing;  and  (2)  that  the  average  rate  of  interest  paid  on  the 
dividend-paying  stocks  has  been  higher  each  year  since  1903  than 
in  any  previous  year  during  the  existence  of  the  Interstate  Com- 
merce Commission. 

This  is  clearly  indicated  by  Table  II,  from  the  "Statistics 
of  Railways  in  the  United  States"  published  by  the  Interstate 
Commerce  Commission. 

Upon  the  facts  here  disclosed,  Commissioner  Lane,  of  the  Inter- 
state Commerce  Commission,  in  reporting  for  the  Commission 
in  the  Western  Advanced  Rate  Case  (Opinion  No.  1509,  dated 
February  22,  1911)  commented  as  follows: 


RAILWAY  ENGINEEBS  ARBITRATION 


Table  11.— Dividends  on  American  Railroad  Stocks 


39 


TEAB 

PER  CENT  OF  STOCK 

AMOUNT  OF  STOCK 

AMOUNT  PAID 

AVERAGE  PAID  ON 

PATINQ  DIVIDENDS 

FATING  DIVIDENDS 

IN  DIVIDENDS 

DIVIDEND  PATINC 
STOCK 

1911* 

67.65 

$5,730,250,326 

$460,195,376 

8.03 

1910* 

66.71 

5,412,578,457 

405,771,416 

7.50 

1909* 

64.01 

4,920,174,118 

321,071,626 

6.53 

1908* 

65.69 

4,843,370,740 

390,695,351 

8.07 

1907 

67.27 

4,948,756,203 

308,088,627 

6.23 

1906 

66.54 

4,526,958,760 

272,795,974 

6.03 

1905 

62.84 

4,119,086.714 

237,964,482 

5.78 

1904 

57.47 

3,643,427,319 

221,941,049 

6.09 

1903 

56.06 

3,450,737,869 

196,728,176 

5.70 

1902 

55.40 

3,337,644,681 

185,391,655 

5.55 

1901 

51.27 

2,977,575,179 

156,735,784 

5.26 

1900 

45.66 

2,668,969,895 

139,597,972 

5.23 

1899 

40.61 

2,239,502,545 

111,009,822 

4.96 

1898 

33.74 

1,818,113,082 

96,152,889 

5.29 

1897 

29.90 

1,603,549,978 

87,110,599 

5.43 

1896 

29.83 

1,559,024,075 

87,603,371 

5.62 

1895 

29.94 

1,485,618,453 

85,287,543 

5.74 

1894 

36.57 

1,767,925,565 

95,515,226 

5.40 

1893 

38.76 

1,809,600,846 

100,929,885 

5.58 

1892 

39.40 

1,825,705,437 

97,614,745 

5.35 

1891 

40.36 

1,796,390,636 

91,117,913 

5.07 

1890 

36.24 

1,598,131,933 

87,071,613 

5.45 

1889 

38.33 

1,629,750,927 

82,110,198 

5.04 

1888 

38.56 

1,490,267,149 

80,238,065 

5.38 

*  Does  not  include  returns  for  switching  and  terminal  companies. 

"This  table,  it  will  be  observed,  begins  with  the  first  year 
after  the  act  to  regulate  commerce  took  effect.  At  that  time 
but  38  per  cent  of  the  stock  of  American  railroads  was  paying 
dividends.  The  amount  paid  was,  in  round  figures,  $80,000,000 
per  year.  Passing  over  the  years  of  industrial  panic  and  coming 
to  he  year  1900  we  find  45  per  cent  of  the  stock  paying  dividends 
amounting  to  $139,600,000.  These  dividends  were  paid  upon 
stock  having  a  par  value  of  $2,669,000,000  upon  which  the  aver- 
age rate  paid  was  5.23  per  cent.  In  1910,  however,  the  amount 
of  stock  paying  dividends  had  increased  to  neariy  $5,500,000  000 
or  more  than  double  what  it  was  in  1900;  the  actual  amount  paid 
m  dividends  had  increased  to  $405,000,000  or  neariy  three  times 
the  amount  paid  in  1900,  and  the  average  rate  had  increased 
over  42  per  cent." 

Also  the  question  arises  regarding  the  proportion  of  non-dividend 
paying  stock  which  is  "water."  If  a  satisfactory  history  of  each 
of  the  roads  were  obtainable,  it  would  be  possible  to  ascertain 


-( 


— * 


40 


RAILWAY  ENGINEERS  ARBITRATION 


just  how  much  money  had  actually  gone  into  each  enterprise. 
But  no  such  history  is  obtainable.  Nor  are  the  facts  available, 
in  all  probability,  by  which,  as  a  result  of  any  amount  of  investi- 
gation, such  a  history  could  be  written. 

Consequently,  the  railroads  were  questioned  with  regard  to 
the  physical  valuation  of  their  properties.  Only  one  road  was 
prepared  to  answer  this  question — the  New  York,  New  Haven 
and  Hartford.  This  road,  an  old  one,  in  a  settled  part  of  the 
country,  with  a  business  well  established,  and  having  many 
important  terminals  is  favorably  situated  as  regards  physical 
valuation  as  compared  with  the  selHng  price  of  its  stocks 
and  bonds.  Doubtless  some  other  roads  are  in  an  equally  favor- 
able position.  If  the  physical  valuation  of  all  the  railroads 
concerned  were  known,  it  is  not  asserted  that  such  valuation 
would  represent  the  true  amount  upon  which  interest  should  be 
paid.  Nor  is  it  asserted  that  a  growing  business  should  not  have 
consideration.  But  only  when  we  have  the  physical  valuations 
of  the  various  roads  concerned,  and  can  compare  them  with  the 
funded  debt  and  the  bonds  and  stock,  shall  we  know  the  rela- 
tive amounts  which  are  claimed  for  ''values  as  going  concerns." 

It  is  often  stated  that  the  value  of  a  railroad  is  determined  by 
the  market  price  of  its  securities.  But  obviously  this  method 
may  be  misleading.  The  market  price  of  the  railroad  stocks 
and  bonds  in  1907,  when  they  reached  a  very  high  level,  amounted 
to  a  much  larger  total  than  their  present  market  value,  notwith- 
standing the  fact  that  during  the  succeeding  years  large  amounts 
have  been  spent  for  additions  and  betterments.  We  all  know 
that  the  railroads  of  the  country  are  now  more  valuable,  at  least 
by  such  additions  and  betterments,  than  they  were  four  or  five 
years  ago.  Manifestly,  therefore,  any  plan  that  determines  the 
value  of  the  railroad  properties  by  the  accident  of  the  market 
price  will  seldom  lead  to  correct  conclusions.* 

*  Take,  for  example,  the  Erie  Railroad.  The  par  value  of  its  stock  was 
$176,271,300  in  1907,  as  well  as  1912.    Yet  in  1907,  the  market  value  of  this 


I 


RAILWAY  ENGINEERS  ARBITRATION 


ADDITIONS   AND   BETTERMENTS 


41 


For  the  year  ending  June  30,  1911,  the  fifty-two  roads  con- 
cerned in  this  arbitration  reported  the  investment,  out  of  income, 
of  $30,937,459  (Railroad  Exhibit  67A)  in  additions  and  better- 
ments. It  is  safe  to  say  that  this  is  a  conservative  estimate,  for 
it  is  well  known  that  when  the  railroads  replace  rails  and  bridges 
out  of  operating  expenses,  they  at  least  make  the  roads  as  good 
as  they  were  before;  and  it  is  fair  to  assume  that  they  improve 
them.  The  money  used  from  income  for  additions  and  better- 
ments may  be  spent  for  exactly  the  same  purposes  for  which 
new  capital  is  used,  namely,  lowering  the  grades,  bujdng  larger 
engines,  and  making  other  improvements  of  this  class.  By  so 
doing,  the  expense  of  operation  per  ton  mile  or  passenger  mile 
is  reduced,  and  thus  results  in  increased  earnings.  However,  a 
considerable  portion  of  the  funds  taken  out  of  income  and  used 
for  additions  and  betterments  are  spent  in  ways  that  enhance 
safety  and  convenience.  Some  of  these  expenditures  are  for  the 
elevation  of  tracks  through  cities,  the  elimination  of  grade  cross- 
ings, the  introduction  of  safety  appliances,  the  electrification 
of  roads  entering  the  larger  cities,  and  the  construction  of  elabo- 
rate, sometimes  monumental,  terminals.  While  the  elevation  of 
tracks,  the  elimination  of  grade  crossings,  the  introduction  of 
safety  devices,  etc.,  do  somewhat  increase  the  net  earning  power 
of  a  road,  in  that  the  traffic  is  more  easily  and  more  rapidly 
handled,  it  cannot  be  said  that  this  increase  is  anything  like  pro- 
portionate to  the  additional  investment;  yet  the  public  demands 
these  additions  and  betterments  for  their  safety,  comfort  and 
convenience.  It  cannot  be  doubted  that  as  a  result  of  using 
income  for  additions  and  betterments  the  value  of  a  property 
is  increased,  although  not  always  in  the  ratio  of  the  cost. 

stock  was  $98,786,022,  while  in  July  1912,  it  was  $73,758,371.  The  bonds, 
at  their  highest  in  1907,  were  worth  $207,503,732,  and  in  July,  1912,  $195, 
796,429,  despite  the  fact  that  there  had  been  an  increase  of  $4,712,000  in 
the  aggregate  par  value  of  the  bonds.  This  represents  a  shrinkage  of 
about  11  per  cent  in  the  value  of  the  road  as  measured  by  the  market  value 
of  its  securities. 


'■ 


^!^^^^S^^S! 


42 


RAILWAY  ENGINEERS  ARBITRATION 


The  policy  of  withholding  a  considerable  amount  out  of  in- 
come for  additions  and  betterments  is  not  criticised.  Indeed, 
it  is  believed  to  be  wise.  But  in  so  far  as  money  is  expended  for 
additions  and  betterments,  the  stockholders  should  either  be  con- 
tent, for  the  time  being,  to  receive  lower  dividends  on  their  stock, 
or,  upon  the  other  hand,  they  should  not  expect  that  in  the  future 
the  increased  value  of  the  property  should  be  capitalized  and 
their  dividends  thereby  increased.  Either  alternative  can  logi- 
cally be  taken.  If  the  dividends  are  decreased  below  a  reason- 
able amount,  for  the  sake  of  additions  and  betterments,  the 
stockholders  are  justified  in  regarding  the  amount  put  in  as  their 
property,  and  therefore  a  basis  for  further  dividends.  If,  on 
the  other  hand,  the  dividends  now  paid  are  reasonable,  and  the 
additions  and  betterments  are  taken  out  of  the  income,  such 
expenditures  should  not  be  the  basis  upon  which  new  securities 
are  issued.  This  matter  has  a  bearing  on  the  present  discussion, 
because  so  far  as  money  goes  into  additions  and  betterments, 
it  makes  the  railroads  for  the  time  being  less  able  to  pay  increased 
wages. 

While  with  reference  to  the  future  it  is  believed  that  the  above 
position  regarding  additions  and  betterments  will  become  a  settled 
policy,  it  is  realized  that  this  has  not  been  true  in  the  past.  It 
was  only  a  few  years  ago  that  the  Interstate  Commerce  Com- 
mission and  some  of  the  State  Commissions  gained  the  right 
to  regulate  rates.  Prior  to  that  time,  the  position  above  advo- 
cated could  not  logically  be  maintained.  During  the  history  of 
many  of  the  railroads  in  question,  large  amounts  of  stocks  have 
been  put  upon  the  market  which  represented  nothing  but  "water"; 
but  which,  during  subsequent  years,  have  been  made  substance 
by  putting  back  from  the  income,  in  additions  and  betterments, 
large  sums  of  money  annually.  In  many  cases  the  "water" 
thus  put  on  the  market  has  been  made  substance  altogether 
by  the  above  process,  by  the  increasing  value  of  real  estate,  es- 
pecially in  cities,  and  other  factors;  in  other  cases  this  has  been 


I 


RAILWAY  ENGINEERS  ARBITRATION 


43 


Y 


A 


accomplished  in  part.    In  still  other  cases  much  of  the  common 
stock  does  not  yet  represent  substance. 

THE   QUESTION   OF  SURPLUS 

During  the  year  ending  June  30,  1911,  the  fifty-two  railroads 
reported  a  surplus  of  $32,129,676.*  There  can  be  no  objection 
to  the  accumulation  of  a  surplus,  provided  it  is  definitely  under- 
stood what  the  uses  are  to  which  a  surplus  can  legitimately  be 
put.  Additional  surplus  is  not  accumulated  to  add  to  the  stock, 
nor  to  add  to  the  dividends;  it  is  accumulated  as  a  reserve  against 
disasters — such  as  floods,  which  may  amount  to  millions  of  dol- 
lars for  a  single  system  in  a  year — and  as  a  provision  for  interest 
on  bonds,  fair  wages  and  dividends,  and  other  expenses  during 
years  when,  for  some  unforeseen  reason,  the  traffic  falls  below  the 
normal.  When  for  a  given  road  a  surplus  has  been  accumulated 
sufficient  to  protect  the  property  adequately  in  these  respects, 
(and,  of  course,  for  a  large  road  the  sum  must  be  much  greater 
than  for  a  small  one)  there  is  no  longer  any  justification  for 
the  increase  of  surplus  from  the  income.  When  it  is  reduced  in 
disastrous  years,  it  should,  in  prosperous  years,  be  again  built 
up  to  a  safe  margin;  but  it  should  not  be  accumulated  to  an 
amount  which  will  serve  for  the  issuance  of  stocks  and  bonds, 
as  has  been  done  in  the  past.  In  the  future  the  public  utilities 
of  the  country  should  not  be  permitted  to  cut  "melons"  from 
surplus. 

CONCLUSIONS 

The  above  features  regarding  the  railroad  situation  are  dwelt 
upon  to  show  how  unable  the  Board  are,  within  any  reasonable 
time,  to  gauge  accurately  the  assertion  of  the  railroads  that  they 
are  financially  unable  to  pay  an  increased  wage.  To  answer  the 
questions  raised  regarding  decreased  expenses  for  maintenance 

♦  Railroad  Exhibit  67  A. 


44 


RAILWAY  ENGINEERS  ARBITRATION 


and  transportation,  to  ascertain  the  amount  of  money  which 
should  fairly  go  to  stocks  and  bonds,  to  interpret  correctly  the 
investment  of  income  for  additions  and  betterments — would  re- 
quire the  work  of  a  staff  of  experts  for  years;  and  even  then  this 
might  not  be  accomplished  with  regard  to  the  past.  For  the 
future,  however,  methods  of  accounting  can  no  doubt  be  worked 
out  and  the  roads  required  to  keep  their  books  so  as  to  furnish 
this  information. 

Having  made  the  above  reservation,  the  figures  furnished  by 
the  railroads  mentioned  above  indicate  upon  their  face  that 
the  roads  are  on  the  average  not  in  a  position  to  make  large 
increases  in  expenditures.  This  view  of  the  situation  presented 
by  the  railroads  is  confirmed  by  the  investigations  made  by 
the  Interstate  Commerce  Commission  in  the  recent  rate  ad- 
vance cases.  This  Commission  reached  the  conclusion  that 
while  the  railroads  were  not  justified  in  making  a  general  increase 
of  rates,  it  was  intimated  that  if  hereafter  there  were  large 
increases  in  expenditures  there  might  be  justification  for  rate 
increases. 

It  is  claimed  by  the  railroads  that  if  the  requests  of  the  engi- 
neers were  granted  in  their  entirety,  the  increased  expenditure 
would  amount  to  $7,172,546;  and  it  is  estimated  by  the  railroads 
that  if  they  should  grant  the  same  percentage  of  increase  to 
other  railway  employes,  this  would  involve  an  additional  expendi- 
ture of  $60,233,232.  If  these  figures  are  correct — that  is,  if 
the  wage  account  of  the  railroads  were  increased  by  a  total  of 
over  $67,000,000 — this  would  amount  to  more  than  the  total 
appropriations  for  additions  and  betterments  ($30,937,459)  and 
the  total  surplus  ($32,129,676)  for  the  year  ending  June  30,  1911. 
However,  the  Board  have  grave  doubts  regarding  the  correctness  of 
these  figures,  especially  regarding  the  amount  of  the  so-called  "col- 
lateral" increases.  It  is  probable  that  the  estimated  amount  of 
increase  for  the  engineers,  in  case  all  their  demands  were  granted^ 
is  approximately  correct.    The  amount  probably  should  not  be 


1 


RAILWAY   ENGINEERS  ARBITRATION 


45 


largely  discounted.  The  Board  do  not  feel  the  same  regarding  the 
estimated  collateral  increases.  It  is  improbable  that  the  collateral 
increases  would  amount  to  more  than  $60,000,000,  as  claimed  by 
the  railroads. 

The  method  of  calculating  collateral  increases  was  investigated 
by  the  statisticians  of  the  Board,  and  it  was  ascertained  that 
each  road  applied  the  same  percentage  of  increase  to  all  other 
classes  of  employes  that  was  estimated  for  the  engineers  in  case 
the  latter's  requests  were  granted.  These  estimated  collateral 
increases  varied  on  the  different  roads  from  10.4  per  cent  in  the 
case  of  the  Bessemer  and  Lake  Erie  to  56.35  per  cent  for  the 
Coal  and  Coke  Railway.  This  shows  how  uncertain  is  the 
calculation  submitted  by  the  railroads  regarding  collateral 
increases.  In  the  opinion  of  the  Board,  the  sum  of  $60,000,- 
000  is  far  too  large  an  estimate  for  all  the  resultant  collateral 
increases.  But  the  Board  believe  that  if  the  requests  of  the 
engineers  were  fully  granted,  some  collateral  increases  would 
inevitably  follow. 

Reports  of  the  fifty-two  railroads  to  the  Interstate  Commerce 
Commission  for  the  fiscal  year  ending  June  30,  1912  show  an 
increase  over  the  fiscal  year  1911  of  $32,810,495  in  their  operating 
revenues,  and  an  increase  of  $21,324,198  in  operating  expenses, 
leaving  an  increase  of  $11,486,297  in  net  operating  revenue  for  the 
year. 

There  is  every  reason  to  believe,  moreover,  that  the  earnings 
of  the  railroads  for  the  fiscal  year  beginning  July  1,  1912  will  be 
larger  than  they  have  been  for  several  years.  Especially  since 
June,  1912,  the  railroads  have  had  a  very  large  business  and  prob- 
ably for  the  ensuing  months  of  the  year  the  freight  business  will 
be  as  great  as  they  can  handle. 

In  many  lines  of  industry  orders  are  so  far  ahead  that  manu- 
facturers will  not  take  additional  ones  except  for  delivery  in  several 
months  and  in  some  cases  even  a  year  or  more  in  the  future. 
This  being  the  situation,  it  is  practically  certain  that  during  the 


46 


RAILWAY  ENGINEERS  ARBITRATION 


fiscal  year  1912-13  the  gross  income  of  the  railroads  will  be  larger 
than  in  1911-12. 

The  foregoing  consideration  of  the  question  of  compensation  to 
capital,  and  of  the  ability  of  the  roads  to  pay  an  increased  wage, 
leads  to  so  uncertain  conclusions  that  the  Board  feel  that  these 
should  not  be  controlling  factors  in  the  award. 

Therefore,  considering  the  uncertainty  of  many  of  the  factors 
involved,  the  arbitrators  feel  that  they  should  not  deny  an  increase 
of  compensation  to  the  engineers  merely  on  the  ground  that  the 
roads  are  unable  to  pay.  They  feel  that  the  engineers  should 
be  granted  a  fair  compensation.  They  furthermore  believe  it  prob- 
able that  a  great  majority  of  the  railroads  in  the  district  concerned 
are  able  to  pay  a  fair  compensation.  If  they  are  not  able  to  pay 
such  compensation  with  existing  rates,  there  is  just  cause  for 
them  to  open  again  the  question  of  an  increase  of  rates  with  the 
Interstate  Commerce  Commission.  In  making  their  award  they 
therefore  eliminate  the  claim  of  the  railroads  that  they  are  unable 
to  pay  an  increased  compensation. 


-< 


0 


V 


THE  BASIS  OF  A  FAIR  WAGE 

Possibly  there  should  be  some  theoretical  relation,  for  a  given 
branch  of  industry,  between  the  amount  of  the  income  that  should 
go  to  labor  and  the  amount  that  should  go  to  capital;  and  if  this 
question  were  decided,  a  scale  of  wages  might  be  devised,  for  the 
different  classes  of  employes,  which  would  determine  the  amount 
rightly  absorbed  by  labor.  It  may  be  that  in  the  future  some  such 
solution  will  be  worked  out  for  the  various  industries;  and  if  so, 
the  income  of  the  railroads  could  be  so  apportioned.  Thus  far. 
However,  political  economy  is  unable  to  furnish  such  a  principle 
as  that  suggested.  There  is  no  generally  accepted  theory  of  the 
division  of  income  between  capital  and  labor.  It  is  certain  that 
the  arbitrators  cannot  make  their  findings  uppn  the  basis  of  some 
future  system.  Their  findings  must  be  based  upon  existing  prac- 
tices. While  the  members  of  the  Board  sympathize  with  the 
demands  of  labor,  and  feel  that  in  the  past,  labor  has  not  always 
received  its  full  share  of  the  joint  income,  this  fact  should  not 
control  the  findings  of  the  Board. 

What,  then,  is  the  basis  upon  which  a  judgment  may  be  passed 
as  to  whether  the  existing  wage  scale  of  the  engineers  in  the 
Eastern  District  is  fair  and  reasonable?  It  seems  to  the  Board 
that  the  only  practicable  basis  is  to  compare  the  rates  and 
earnings  of  engineers  in  the  Eastern  district  with  those  of  en- 
gineers in  the  Western  and  Southern  districts  and  with  those  of 
other  classes  of  railway  employes.  In  doing  the  latter  it  is  not 
meant  to  assume  that  the  compensation  of  the  engineers  should 
not  be  higher  than  that  of  other  skilled  labor  in  railroad  service, 
but  in  order  to  ascertain  the  difference  which  has  actually  existed 
between  the  engineers  and  other  classes  of  railroad  employes  in 
the  same  and  in  different  districts. 

47 


48 


RAILWAY  ENGINEERS  ARBITRATION 


Each  side  to  the  arbitration  has  recognized  the  bearing  of 
such  comparisons  on  the  questions  involved,  by  submitting  com- 
parisons between  the  wages  received  by  engineers  and  by  other 
railway  employes. 

The  Board  feel  compelled  to  base  their  award  upon  existing 
facts,  rather  than  upon  a  theory  regarding  the  division  of  the 
fruits  of  industry. 

COMPENSATION  NOW  RECEIVED 

The  railroads  submitted  an  exhibit  showing  the  maximum 
monthly  earnings  of  different  classes  of  engineers.  The  following 
are  illustrations  from  some  of  the  more  important  roads. 

Baltimore  &  Ohio — Earnings  of  highest-paid  engineer  for  Janu- 
ary, 1912: 

Passenger:    Regular  time,  5,910  miles  @  $3.90,  $230.50; 

overtime,  31  hours  @  45  cents,  $13.95 $244.45 

Average  for  seven  months 181 .85 

Freight:  Regular  time,  3,487  miles  @  $4.70  and  $4.85; 
1  day  @  $5.40,  $174.35;  overtime,  102  hours  @  47 
cents,  54  cents  and  48 J  cents,  $49.50 $223 .  85 

Average  for  seven  months 179 .48 

Bessemer  &  Lake  Erie — Earnings  of  highest-paid  engineer  for 
September,  1911: 

Passenger:  Regular  time,  mileage  3,823  @  $4.20  and 
$4.60;  hours  on  duty,  150.37,  straight  time  allow- 
ance 3,978  miles;  no  overtime $167.56 

Average  for  seven  months 162.71 

Freight:  Regular  time,  mileage  3,634  @  $5.00,  hours 
on  duty  337.40,  straight  time  3,725  miles;  over- 
time, 230  miles $198.00 

Average  for  seven  months 168 .  50 


'''««i.' 


-f 


s 


V 


RAILWAY  ENGINEERS  ARBITRATION  49 

Central  of  New  Jersey — Earnings  of  highest-paid  engineer  for 
January,  1912: 

Passenger:  Worked  26  days,  26  trips;  Jersey  City  to 
Philadelphia  and  return,  4,814  miles  @  $4.25,  time 
in  service  191.15  hours $204 .60 

Average  for  seven  months 192.59 

Freight:  Worlced  23  days,  23  trips;  mileage,  4,120  regu- 
lar time;  42  miles  overtime;  total  miles,  4,162  @ 
$4.85;  time  in  service  337.15  hours $201 .86 

Average  for  seven  months 186 .20 

Cleveland,  Cincinnati,  Chicago,  &  St.  Louis — Earnings  of  high- 
est-paid engineer  for  January,  1912: 

Passenger:  Regular  time,  5,350  miles  @  $3.90 $208.65 

Average  for  seven  months 199 .  10 

Freight:  14^  turn-around  trips,  292  miles  per  trip;  11 
additional  miles;  total,  4,245  miles  @  $4.75;  over- 
time, 1  hour  @  47^  cents $202.10 

Average  for  seven  months 164 .  10 

Delaware,  Lackawanna  &   Western — Earnings  of  highest-paid 
engineer  for  January,  1912: 

Passenger:  Regular  time,  29  trips  of  152  miles  each  4,408 
miles  @  $4.10;  3  trips  of  141  miles  each,  423  miles 
@  $4.50. — Terminal  delays,  14.24  hours;  144  miles 
@  $4.10;  total  time  on  duty,  195.46  hours $205.67 

Average  for  seven   months 189 .34 

Freight:  Regular  time,  31  trips,  141  miles  each,  6  miles 
overtime,  1  trip  176  miles,  total  1,531  miles  @  $4.80, 
2,996  miles  @  $4.65,  and  6  miles  @  $4.65;  total  time 
on  duty,  251.59  hours,  including  36  minutes  over- 
time    $214.05 

Average  for  seven  months. 181 .62 


; 


V 


I 


50  RAILWAY  ENGINEERS  ARBITRATION 

Lake  Shore   &    Michigan  Southern — Earnings  of  highest-paid 
engineer  for  January,  1912: 

Passenger:  Regular  time,  6,252  miles  @  $4.15;  180  miles 

@  $2.07|;  overtime,  70  miles  @  $4.20,  35  trips. . . .  $266.15 

Average  for  seven  months 169 .80 

Freight:  Regular  time,  945  miles  @  $4.15;  3,490  miles 
@  $4.85;  overtime,  10  miles  @  $4.20;  110  miles  @ 
$4.85,  39  trips $214.25 

Average  for  seven  months 116 .06 

Michigan  Central — Earnings  of  highest-paid  engineer  for  Janu- 
ary, 1912: 

Passenger:  Straight  time,  55.43  days;  overtime,  13  hours; 

56.7  days  @$4.15 $235.30 

Average  for  seven  months 47 .  07 

(Handles  through  passenger  trains  between  Wind- 
sor and  Buffalo) 

Freight:  Straight  time,  34.5  days,  overtime  14.4  days, 
total  48.54  days  @  $5.45;  overtime  figured  @  12.8 
miles  per  hour;  overtime  after  10.50  hours  on  duty . .  $264 .30 

Average  for  seven  months 235 .  75 

(Operates  a  train  from  Kalamazoo  to  Jackson  and 
turn-around.) 

New  York,  Chicago  &  St.  Louis — Earnings  of  highest-paid  engi- 
neer, month  not  given: 

Passenger:  29  trips  @  $5.85;  4  hours  overtime  @  46 

cents $171 .50 

Freight:  30  trips  @  $5.80:  34  hours  overtime,  @  46 

cents $189 .  65 

New  York,  New  Haven  &  Hartford — Earnings  of  highest-paid 
engineer  for  August,  1911: 


IT^^B 


-/ 


V 


-( 


-/ 


-( 


♦ 


"- ., . 


RAILWAY  ENGINEERS   ARBITRATION  51 

Passenger:  5,208  miles  ®  $4.10;  63  hours  overtime  ©41 

cents $239.45 

Average  for  seven  months 194 .40 

Freight:  December,  1911,  3,810  miles  @  $4.65;  131  hours 
overtime  @  46|  cents;  8  doubling  miles  @  $0.0465, 
i  day  switching  @  $3.50 $240.29 

Average  for  seven  months 203 .  25 

Pennsylvania  Lines-East — Earnings  of  highest-paid  engineer  for 

January,  1912: 

Passenger:  27  trips  @  $7.22;  108  hours  overtime  ®  41J 

cents;  99  terminal  miles  @  $0.0415;  3  trips  @  $5.27  $259.68 

Average  for  seven  months 237 .  37 

Freight:  (Slow).  Time  on  duty,  400.5  hours;  43  trips 
@  $3.89;  2  trips  @  $4.85;  1  trip  @  $5.33;  total, 
$182.30;  overtime,  $41.80 $224 .  10 

Average  for  seven  months 187 .86 

Pennsylvania  Lines-West — Earnings  of  highest-paid  engineer  for 
October,  1911: 

Passenger:  January,  1912.  Total  hours  on  duty  257.17; 
miles  run,  5,783;  trips  43;  regular  time  247.4  hours; 
overtime  10.13  hours;  wage  paid  per  hour  on  duty 
98.8  cents $253 .90 

Average  for  seven  months 185 .82 

Freight:  October,  1911.  Total  hours  on  duty  444.19; 
miles  run  3,570;  trips  30;  regular  time  355.44  hours; 
overtime  88.35  hours;  wages  paid  per  hour  on  duty 
48i  cents;  leave  of  absence,  1  day $215 .60 

Average  for  seven  months 201 .38 

Vandalia — Earnings  of  highest-paid  engineer,  January,   1912: 
Passenger:  26  trips  @  $7.26;  6  trips  @  $6.89;  2  hours 

18  minutes  overtime  @  50  cents $231 .25 

Average  for  seven  months 203 .  55 


k 


V 


52 


RAILWAY  ENGINEERS   ARBITRATION 


Freight:  19  trips  @  $8.10;  4  trips  @  $4.85;  2  hours  13 
minutes  overtime  @  48^  cents;  1  trip  @  S6.89;  4 
trips  @  $7.26 ^210  30 

Average  for  seven  months 165  63 

The  actual  earnings  of  the  twenty-five  engineers  who  testified 
before  the  Board  were  also  ascertained.  The  names  of  these 
men,  the  roads  and  divisions  upon  which  they  worked,  the  char- 
acter of  the  service,  the  average  earnings  per  month,  and  the 
estimated  earnings  for  the  year,  are  given  in  Table  III  on  pa-^es 
54-56. 

From  this  table  it  appears  that  the  lowest  annual  compensation 
for  any  of  these  25  men  was  $1,200  and  the  highest  $2,386.80;  the 
average  being  approximately  $1660.00. 

The  men  named  in  this  table  are  to  a  certain  extent  a  selected 
group  and  their  average  compensation  is  therefore  probably 
greater  than  for  most  engineers  in  the  Eastern  District.  As 
shown  by  the  report  of  the  Interstate  Commerce  Commission 
the  average  "daily"  compensation  of  the  engineers  in  this  territory 
in  1911  was  $4.71.  It  should  be  remembered  that  the  basis  of 
the  calculation  giving  this  figure  is  what  is  regarded  as  a  normal 
day's  work.  If  a  man  makes  more  than  an  average  number  of 
runs,  or  puts  in  much  overtime,  he  may  make  more  than  thirty 
days'  pay  in  a  month. 

If  due  allowance  be  made  for  overtime  on  the  one  hand  and 
"lay  offs"  allowed  for  on  the  other  hand,  the  Board  estimates  that 
an  engineer  who  does  300  normal  days  work  in  a  year  would  receive 
an  annual  compensation  of  about  $1,400.  This  sum  probably 
approximates  the  average  earnings  of  the  engineers  in  the  ter- 
ritory concerned. 

The  higher  sums  above  named  are  significant  to  the  extent  that 
they  show  the  compensation  of  some  of  the  men  who  by  seniority 
have  the  better  runs.     In  an  exceptional  month  a  man  having  a 
good  run  may  earn  somewhere  from  $200  to  $250.     In  a  year 
the  men  having  the  more  favorable  runs  may  earn  from  $1,600 


-i 


4 


J 


i 


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i 


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i 


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RAILWAY  ENGINEERS  ARBITRATION 


53 


to  $2,300;  and  men  receiving  compensation  between  these  ranges 
are  rather  numerous.  However,  the  average  annual  earnings  of 
all  engineers  for  the  territory  cannot  certainly  be  assumed  to  be 
more  than  $1,400. 

AVERAGE  DAILY  COMPENSATION  OF  ENGINEERS  AND  OTHER  CLASSES 
OF  RAILROAD  EMPLOYES  FROM  1897  TO  1911 

Among  the  arguments  presented  by  the  engineers  for  an  increase 
of  compensation  is  that  the  engineers  in  the  Western  and  Southern 
districts  are  receiving  a  higher  compensation  than  those  in  the 
Eastern  District.     The  Board,  so  far  as  they  were  able  to  enter 
into  an  investigation  of  this  subject,  gained  the  general  impression 
that  these  statements  were  justified;  but  they  have  been  unable 
to  answer  to  their  own  satisfaction  the  question  of  how  much  higher 
the  wages  are  in  the  West  and  South  than  they  are  in  the  East. 
To  investigate  this  subject  fully  would  require  more  time  than  has 
been  available  to  the  Board  before  it  has  been  necessary  to  make 
an  award.     They  have  therefore  been  obliged  to  turn  to  the  only 
source  of  information  available  on  the  subject— the  figures  of  the 
Interstate  Commerce  Commission.     They  recognize  that  these 
figures  have  been  made  up  in  a  manner  which  may  render  them 
unsatisfactory  for  comparative  purposes.     It  appears  that  the 
wage  statistics  published  by  the  Commission  are  prepared  from 
reports  made  by  the  individual  roads.    The  total  amount  of  com- 
pensation paid  by  a  road  to  a  given  class  of  employes  is  divided 
by  the  number  of  days  worked  by  men  in  that  class  to  determine 
the  average  daily  wage.     Reports  are  compiled  for  the  several 
groups  used  by  the  Commission  for  statistical  purposes.     The 
total  compensation  to  a  class  is  not  distributed  among  the  differ- 
ent lines  of  work.     For  example:  all  engineers,  passenger,  freight 
and  switching,  are  included  under  the  head  ''engineers"  and  all 
compensation  paid  them,  whether  for  mileage,  overtime  or  dead- 
heading, is  included  in  the  lump  sum.    Neither  the  maximum  nor 
minimum  earnings  are  shown. 


-/ 


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67 


The  manner  in  which  the  Interstate  Commerce  Commission's 
figures  have  been  compiled  makes  it  plain  that  they  do  not  give  a 
basis  for  accurate  comparison.  The  differences  may  be  greater 
or  less  than  those  shown  by  the  figures  of  the  Interstate  Commerce 
Commission.  Nevertheless,  since  these  statistics  are  the  only 
ones  available  to  the  Board  to  guide  them  regarding  the  claim  that 
wages  are  higher  in  the  West  and  South  than  in  the  East,  compar- 
isons of  the  compensation  in  these  districts  and  with  the  United 
States  as  a  whole,  are  inserted  upon  the  basis  of  the  available  data. 
The  comparisons  cover  the  years  1897  to  1911  inclusive.  The 
year  1897  is  chosen  for  beginning  the  statistics  since  in  that  year 
wages  were  at  a  low  ebb. 

Also,  tables  have  been  prepared  showing  differentials  between 
the  engineers,  firemen,  conductors  and  other  trainmen  for  the  dif- 
ferent districts  and  the  country  as  a  whole  from  1897  to  1911. 

Before  discussing  these  tables  it  should  be  recalled  that  the 
Interstate  Commerce  Commission  in  its  report  for  1911  abandons 
the  former  grouping  of  states  and  substitutes  therefor  a  three- 
group-system— called  the  Eastern,  Southern  and  Western  districts. 

This  Eastern  District  embraces  the  former  Groups  I,  II  and  III, 
with  the  addition  of  half  the  state  of  Illinois.  Groups  IV  and  V 
under  the  old  system,  now  form  the  "Southern  district,''  and  the 
remaining  states  form  the  ''Western  district,"  except  for  the  por- 
tion of  Illinois  that  has  been  added  to  the  Eastern  District. 

While  this  modification  in  the  territorial  groups  makes  impos- 
sible a  comparison  of  single  groups  in  1911  with  the  same  groups 
in  previous  years,  it  does  not  seriously  affect  the  accuracy  of  com- 
parisons of  the  several  regions  designated  as  Eastern,  Southern 
and  Western. 

Table  IV  indicates  the  average  daily  compensation  of  thirteen 
different  classes  of  railroad  employes  for  the  years  1897  to  1911, 
inclusive.  The  classes  of  employes  included  are  engineers,  fire- 
men, conductors,  other  trainmen,  station  agents,  other  station 
men,   section  foremen,  other  trackmen,  machinists,  carpenters, 


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other  shopmen,  telegraph  operators  and  dispatchers,  switch  tenders, 
crossing  tenders  and  watchmen.  Each  class  of  employes  is  again 
divided  according  to  the  geographical  divisions  of  the  United  States 
recognized  by  the  Interstate  Commerce  Commission. 

Table  IV  also  indicates  the  average  daily  compensation  of  each 
class  of  railway  employes,  from  1897  to  1911,  inclusive,  for  the 
United  States  as  a  whole.  It  shows  that  in  all  parts  of  the  United 
States  engineers  are  the  highest-paid  class  of  railway  operatives, 
and  that  their  average  daily  compensation  for  the  country  as  a 
whole  has  risen  from  $3.65  in  1897  to  $4.79  in  1911.  It  shows 
further,  for  every  year  here  considered,  that  the  daily  compensa- 
tion of  engineers  has  averaged  higher  in  the  Western  groups 
than  in  the  Southern  groups,  while  the  same  relation  is  true  of  the 
Southern  States  compared  with  the  Eastern  States. 

Therefore,  the  existing  situation  under  which  the  engineers  of 
the  East  receive  a  compensation  somewhat  lower  than  those  in  the 
South  and  West  is  not  new. 

Table  IV  indicates  that  the  average  daily  compensation  of  the 
engineers  for  the  United  States  as  a  whole  is  almost  double  that  of 
the  telegraphers  and  dispatchers,  $2.44,  and  more  than  double 
that  of  the  station  agents,  $2.17.  The  difference  is  not  so  great 
for  the  skilled  artisans  in  the  railway  service.  It  is  52  per  cent 
greater  than  machinists,  $3.14,  and  88  per  cent  greater  than  car- 
penters, $2.54.  For  unskilled  labor  a  higher  ratio  of  course 
obtains,  but  comparisons  with  unskilled  labor  can  have  little 
bearing  upon  the  questions  involved  in  this  arbitration. 

Table  V  gives  the  compensation  of  each  class  of  employes  for 
the  years  1897  and  1911  in  the  Eastern,  Southern,  and  Western 
districts,  and  in  the  United  States  as  a  whole,  and  the  percentage 
of  increase  for  each  class  of  operatives.  While  in  1911,  the  average 
daily  compensation  of  the  engineers  in  the  Eastern  District  ($4.71) 
was  lower  by  14  cents  than  in  the  Southern  District  ($4.85),  and 
lower  by  19  cents  than  in  the  Western  District  ($4.90),  in  1897 
the  average  daily  compensation  in  the  East  ($3.53)  was  11  cents 


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lower  than  in  the  South  ($3.64).  and  29  cents  lower  than  in  the 
West  (S3.82).  Therefore,  the  absolute  gap  between  the  eastern 
and  western  engineers'  daily  compensation  has  been  decreased  by 
one-third  during  the  years  from  1897  to  1911,  and  the  gap  between 
the  eastern  and  southern  engineers  has  increased  by  over  one- 
fourth. 

Table  V  also  shows  that  for  other  classes  of  employes  a  similar 
relation  exists  between  the  East  and  West  as  for  engineers.  With- 
out exception,  the  conductors,  firemen,  other  trainmen,  etc., 
receive  a  higher  average  daily  compensation  in  the  West  than  in 
the  East.  The  table  brings  out  one  other  important  point.  We 
have  already  seen  that  the  gap  between  the  average  compensation 
of  engineers  in  the  Eastern  and  Western  Districts  has  lessened 
through  the  years.  The  closing  of  the  gap  thus  illustrated  between 
the  West  and  the  East  applies  to  the  four  classes  above  mentioned; 
that  is  to  say,  the  difference  in  the  level  of  average  daily  compen- 
sation between  the  West  and  the  East  was  greater  in  1897  than 
this  difference  in  1911. 

Table  VI  indicates  the  average  daily  compensation  of  engineers, 
firemen,  conductors  and  other  trainmen  in  the  Eastern,  Southern, 
and  Western  Districts  and  in  the  United  States  as  a  whole,  for  the 
years  1897  to  1911.  Charts  A,  B,  C  and  D  present  the  same  in- 
formation graphically. 

Next  to  the  engineers,  the  conductors  are  the  highest  paid  rail- 
way operatives.  Their  average  daily  compensation  in  the  United 
States  as  a  whole  rose  from  $3.07  in  1897  to  $4.16  in  1911; 
while  the  average  daily  compensation  of  the  engineers  rose  from 
$3.65  to  S4.79.  Thus  the  average  daily  compensation  of  the 
conductors  during  these  years  increased  $1.09,  whereas  the  aver- 
age daily  compensation  of  the  engineers  increased  $1.14.  For  the 
Eastern  District,  the  average  daily  compensation  of  the  engineers 
rose  from  $3.53  to  $4.71,  an  increase  of  $1.18,  whereas  the  aver- 
age daily  compensation  of  conductors  in  this  District  increased 
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70 


RAILWAY  ENGINEERS  ARBITRATION 


both  for  the  United  States  as  a  whole  and  for  the  Eastern  District, 
the  absolute  increase  in  the  average  daily  compensation  of  the 
engineers  and  the  conductors  has  been  substantially  parallel. 

In  the  matter  of  average  daily  compensation  of  trainmen, 
the  firemen  come  next  to  the  conductors.  For  the  United  States 
as  a  whole,  from  1897  to  1911,  their  average  daily  compensation 
increased  from  $2.05  to  $2.94,  an  increase  of  89  cents.  As  we  have 
just  seen,  the  average  daily  compensation  of  the  engineers  during 
that  time  increased  by  $1.14.  In  the  Eastern  District  the  average 
daily  compensation  of  the  firemen  increased  from  $1.97  to  $2.88, 
an  increase  of  91  cents,  whereas  the  increase  in  the  average  daily 
compensation  of  the  engineers  in  the  same  territory  was  $1.18. 

Therefore,  during  these  fourteen  years,  the  absolute  increase  in 
the  average  daily  compensation  of  the  engineers,  in  the  United 
States  as  a  whole,  and  of  the  engineers  in  the  East,  has  been  some- 
what greater  than  the  increase  for  the  firemen;  the  difference  in 
the  increase  being,  for  the  United  States  as  a  whole,  25  cents  in 
favor  of  the  engineers,  and  for  the  Eastern  District,  27  cents  in 
favor  of  the  engineers. 

For  other  trainmen,  the  average  daily  compensation  rose  for 
the  United  States  as  a  whole  from  $1.90  in  1897  to  $2.88  in  1911, 
an  increase  of  98  cents,  whereas  during  the  same  period  the  average 
daily  compensation  of  the  engineers  increased  $1.14.  For  the 
Eastern  District,  the  average  daily  compensation  of  other  train- 
men rose  from  $1.88  in  1897  to  $2.94  in  1911,  an  increase  of  $1.06, 
whereas  the  increase  in  average  daily  compensation  of  the  engineers 
in  the  same  district  was  $1.18. 

Upon  the  whole  there  has  been  a  noticeable  parallelism  during 
these  fourteen  years  in  the  absolute  increases  in  the  average  daily 
compensation  of  engineers,  conductors,  firemen  and  other  trainmen 
for  the  Um'ted  States  as  a  whole  and  for  the  Eastern  District. 
This  is  indicated  graphically  by  Charts  A  and  D. 

Another  way  in  which  the  average  daily  compensation  of  differ- 
ent classes  of  railway  employes  may  be  compared  is  by  ratios  rather 


' 


y 


RAILWAY  ENGINEERS  ARBITRATION 


71 


than  absolute  amount.  Have  the  ratios  of  increase  of  engineers, 
conductors,  firemen  and  other  trainmen  remained  the  same  since 
1897,  and  if  not,  what  are  the  facts  in  this  regard?  To  answer 
this  question  Table  VII  and  chart  E  have  been  prepared.  They 
indicate  the  ratio  that  the  average  daily  compensation  of  firemen, 
conductors  and  other  trainmen,  bore  to  the  average  daily  com- 
pensation of  the  engineers  in  the  years  1897  to  1911  inclusive. 

The  average  daily  compensation  of  the  other  classes  of  trainmen 
(firemen,  conductors  and  other  trainmen)  are  expressed  in  per- 
centages of  the  engineers'  average  daily  compensation.  Thus,  for 
example,  the  average  daily  compensation  of  firemen  in  the  Eastern 
District  in  1904  was  57.83  per  cent  of  the  average  daily  compensa- 
tion of  the  engineers  in  that  District;  whereas  the  average  daily 
compensation  of  conductors  in  1904  was  84.34  per  cent  of  the 
average  daily  compensation  of  the  engineers  in  that  District. 

Table  VII — Part  1:  Average  Daily  Compensation  of  Firemen,  Conductors, 
and  Other  Trainmen,  Eastern  District,  in  Percentages  of  Average  Daily 
Compensation  of  Engineers. 


TEAR 

FIREMEN 

CONDUCTORS 

OTHER  TRAINMEN 

1897 

55.81 

82.72 

53.26 

1898 

56.15 

83.52 

53.35 

1899 

56.02 

83.47 

53.50 

1900 

56.63 

83.70 

53.59 

1901 

57.02 

83.47 

54.55 

1902 

57.14 

83.56 

54.72 

1903 

57.03 

84.14 

55.75 

1904 

57.83 

84.34 

56.57 

1905 

58.44 

84.13 

57.43 

1906 

59.70 

83.63 

59.45 

1907 

59.52 

83.86 

60.96 

1908 

59.53 

83.49 

60.23 

1909 

60.14 

83.45 

59.91 

1910 

59.91 

84.51 

61.05 

1911 

61.15 

85.56 

62.42 

Note:  This  Table  shows  how  many  cents  the  Firemen,  Conductors 
and  Other  Trainmen  received  for  every  Dollar  received  by  the  Engineers, 
as  their  Average  Daily  Compensation;  computed  from  information  reported 
by  the  Railroads  to  the  Interstate  Commerce  Commission. 


•**ia^i 


72 


RAILWAY  ENGINEERS  ARBITRATION 


Table  VII— Pari  2:  Average  Daily  Compensation  of  Firemen,  Conductors 
and  Other  Trainmen,  Southern  District,  in  Percentages  of  Average  Daily 
Compensation  of  Engineers. 


TEAB 

FIREMEN 

CONDUCTORS 

OTHER  TRAINMEN 

1897 

48.35 

79.67 

43.13 

1898 

48.54 

78.25 

44.03 

1899 

49.36 

78.66 

42.16 

1900 

48.96 

79.94 

42.45 

1901 

48.98 

78.06 

42.60 

1902 

48.15 

76.05 

41.48 

1903 

47.36 

77.64 

40.63 

1904 

48.23 

76.12 

41.61 

1905 

46.84 

75.41 

42.39 

1906 

48.04 

76.91 

43.42 

1907 

49.45 

80.31 

45.51 

1908 

49.56 

80.97 

45.58 

1909 

50.34 

80.00 

45.62 

1910 

50.11 

78.40 

44.71 

1911 

52.99 

82.47 

50.10 

Table  VII— Pari  5;  Average  Daily  Compensation  of  Firemen,  Conductors 
and  Other  Trainmen,  Western  District,  in  Percentages  of  Average  Daily 
Compensation  of  Engineers. 


'  tt 


TEAR 

FIREMEN 

CONDUCTORS 

OTHER  TRAINMEN 

1897 

58.64 

87.17 

54.71 

1898 

58.35 

86.89 

54.24 

1899 

59.22 

87.01 

54.81 

1900 

60.05 

87.63 

54.38 

1901 

60.10 

86.70 

55.24 

1902 

60.15 

86.04 

55.33 

1903 

60.00 

86.83 

56.83 

1904 

60.19 

90.28 

58.77 

1905 

60.56 

89.67 

59.15 

1906 

61.23 

90.78 

59.15 

1907 

61.93 

91.28 

62.39 

1908 

62.39 

90.00 

60.65 

1909 

62.91 

90.89 

60.74 

1910 

63.40 

90.85 

61.06 

1911 

65.71 

91.02 

61.22 

m^T"'*^ 


i^ 


RAILWAY  ENGINEERS  ARBITRATION 


73 


i 


i 


V 


/ 


Table  VII — Part  4:  Average  Daily  Compensation  of  Firemen,  Conductors 
and  Other  Trainmen  in  the  United  States,  in  Percentages  of  Average  Daily 
Compensation  of  Engineers. 


TEAR 

FIREMEN 

CONDUCTORS 

OTHER  TRAINMEN 

1897 

56.16 

84.11 

52.05 

1898 

56.18 

84.14 

52.42 

1899 

56.45 

84.14 

52.15 

1900 

57.07 

84.53 

52.27 

1901 

57.14 

83.86 

52.91 

1902 

57.29 

83.59 

53.13 

1903 

56.86 

84.29 

54.11 

1904 

57.32 

85.37 

55.37 

1905 

57.77 

84.95 

56.07 

1906 

58.74 

85.19 

57.04 

1907 

59.07 

85.81 

59.07 

1908 

59.33 

85.62 

58.43 

1909 

60.14 

85.81 

58.33 

1910 

60.22 

85.93 

59.12 

1911 

61.38 

86.85 

60.13 

The  figures  show  that  the  total  decUne  in  the  "differentials" 
during  the  fourteen  years  amounts  to  5.34  cents  per  dollar  in  the 
case  of  the  firemen  in  the  Eastern  District  compared  with  the 
engineers;  2.84  cents  per  dollar  in  the  case  of  the  conductors;  and 
9.16  cents  in  the  case  of  other  trainmen.  For  firemen  this  is 
slightly  more  than  the  decline  for  the  country  as  a  whole;  for 
conductors  slightly  less;  and  for  other  trainmen  considerably 
more. 

Table  VII  shows  for  the  United  States  as  a  whole  a  slight  but 
fairly  steady  decline  in  the  differential  between  the  average  daily 
compensation  of  the  firemen  and  of  the  engineers,  and  a  somewhat 
greater  decline  in  the  differential  between  the  average  daily  com- 
pensation of  the  other  trainmen  and  of  the  engineers.  For  the 
country  as  a  whole  the  difference  between  the  average  daily  com- 
pensation of  the  conductors  and  that  of  the  engineers,  per  dollar 
of  compensation  paid  the  engineers,  has  decreased  from  15.89 
cents  to  13.15  cents — a  decrease  of  2.74  cents.  For  the  Eastern 
District,  this  difference  has  decreased  from  17.28  cents  to  14.44 


74 


RAILWAY  ENGINEERS  ARBITRATION 


IfVi 


cents,  a  decline  of  2.84  cents.  For  firemen,  in  the  United  States  as 
a  whole,  the  difference  has  declined  from  43.84  cents  to  38.62  cents 
a  decrease  of  5.22  cents;  whereas  for  the  Eastern  District  the  differ- 
ence has  declined  from  44.19  cents  to  38.85  cents,  a  decrease  of 
6.34  cents;  for  other  trainmen  in  the  United  States  as  a  whole, 
the  difference  has  dechned  from  47.95  cents  to  39.87  cents— a 
decrease  of  8.08  cents;  whereas  for  the  Eastern  District  the  differ- 
ence has  declined  from  46.74  cents  to  37.58  cents,— a  decrease  of 
9.16  cents. 

It  appears  from  these  figures,  considering  the  average  daily  com- 
pensation of  engineers,  conductors,  firemen  and  other  trainmen  in 
terms  of  ratios,  the  engineer's  average  daily  compensation  being 
used  as  the  base,  that  there  has  been  a  very  slight  gain  of  the 
conductors  upon  the  engineers,  in  the  United  States  as  a  whole;  a 
somewhat  greater  gain  of  the  firemen  upon  the  engineers;  and  a 
still  greater  gain  of  other  trainmen  on  the  engineers: — also  that  in 
the  East  the  gain  has  been  less  than  3  cents  per  dollar  for  con- 
ductors, somewhat  more  than  5  cents  in  the  case  of  the  firemen, 
and  over  9  cents  in  the  case  of  other  trainmen.  This  is  the  gain 
of  fourteen  years.  It  is  also  notable  that  the  gain  in  these  differ- 
entials in  the  Eastern  District  is  substantially  the  same  as  in  the 
United  States  as  a  whole— for  the  conductors  in  the  United  States 
as  a  whole  it  was  2.74  cents,  and  in  the  Eastern  District  2.84  cents; 
for  firemen  in  the  United  States  as  a  whole  it  was  5.22  cents;  and 
in  the  Eastern  District  5.34  cents.  For  other  trainmen  in  the 
United  States  as  a  whole  it  was  8.08  cents;  and  in  the  Eastern 
District  9.16  cents. 

Table  VII  shows  that  the  differential  between  the  engineers 
and  conductors  for  the  Southern  District  is  greater  than  in  either  of 
the  other  districts,  and  that  this  has  been  the  situation  from  1897  to 
1911;— 20.33  cents  at  the  former  date  and  17.53  cents  at  the  latter. 

Table  VII  further  shows  that  the  differential  between  engineers 
and  conductors  in  the  Western  District  is  considerably  less  than 
for  the  United  States  as  a  whole  or  for  any  other  district.     As 


4| 


RAILWAY  ENGINEERS  ARBITRATION 


75 


compared  with  the  Eastern  District  it  was  a  little  more  than  two- 
thirds  as  much  in  1897;  12.83  cents  in  the  West,  for  each  dollar 
paid  the  engineers,  as  compared  with  17.28  cents  in  the  East;  in 
1911  it  was  less  than  two-thirds  as  much,  8.98  cents  in  the  West  as 
compared  with  14.44  cents  in  the  East. 

The  differentials,  in  the  Eastern  District,  between  the  engineers, 
on  the  one  hand,  and  firemen,  conductors  and  other  trainmen, 
on  the  other  hand  (expressing  the  average  daily  compensation 
of  the  latter  classes  in  percentages  of  that  of  the  engineers),  is  in- 
dicated graphically  by  Chart  E. 


< 


A  third  way  in  which  the  figures  regarding  average  daily  com- 
pensation may  be  considered  is  on  a  percentage  basis  in  which 
the  compensation  of  conductors,  firemen  and  other  trainmen  are 
taken  as  100  per  cent  and  the  compensation  of  the  engineers  for 
the  years  1897  to  1911  thus  compared  with  them.  The  facts 
under  this  method  of  comparison  are  shown  by  Table  VIII. 

Table  VIII — Per  Cent  Engineers'  Compensation  is  Greater  than  that  of  Fire- 
men, Conductors,  and  other  Trainmen,  in  the  Eastern  District 


TEAK 

FIREMEX 

CONDUCTORS 

OTHER  TRAINMEN 

1897 

79.19 

20.80 

87.77 

1898 

78.11 

19.73 

87.43 

1899 

78.50 

19.80 

86.91 

1900 

76.59 

19.47 

86.60 

1901 

75.36 

19.80 

83.33 

1902 

75.00 

19.68 

82.76 

1903 

75.34 

18.84 

79.36 

1904 

72.93 

18.56 

76.79 

1905 

71.12 

18.86 

74.12 

1906 

67.51 

19.58 

68.22 

1907 

68.02 

19.25 

64.03 

1908 

67.97 

19.78 

66.02 

1909 

66.28 

19.83 

66.93 

1910 

66.92 

18.33 

63.81 

1911 

63.54 

16.87 

60.20 

From  this  table  it  appears  that  for  the  Eastern  District  the 
difference  between  the  compensation  of  engineers  and  other  train- 


.» 


f>} 


76 


RAILWAY  ENGINEERS  ARBITRATION 


men,  for  illustration,  was  87.77  per  cent  of  the  daily  compensation 
of  other  trainmen  in  1897— that  is,  the  daily  compensation  of 
engineers  in  1897  was  87.77  per  cent  greater  than  the  daily  com- 
pensation of  other  trainmen;  in  1911  the  percentage  by  which  the 
engineers'  earnings  was  greater  than  those  of  other  trainmen  had 
fallen  to  60.20  per  cent.  Similarly,  the  earnings  of  engineers  in 
1897  were  79.19  per  cent  greater  than  those  of  firemen,  and  in 
1911  only  63.54  per  cent  greater;  those  of  engineers  in  1897  were 
20.89  per  cent  greater  than  those  of  conductors,  and  in  1911, 
16.87  per  cent. 

These  facts  are  shown  graphically  by  Charts  F,  G  and  H. 

Whichever  wage  is  used  as  the  divisor— whether  that  of  the 
engineers  for  all  three  differential  comparisons  or  that  of  each  of 
the  other  groups  of  employes  separately— the  same  result  follows: 
that  is,  that  over  a  period  of  fifteen  years  from  1897  to  1911  the 
engineers  in  the  Eastern  District  have  lost  in  relation  to  the  other 
groups.  In  other  words,  the  other  groups  have  gained  upon  the 
engineers.  This  method  of  measuring  the  differential  shows  that 
the  engineers  over  the  period  of  years  in  question  have  not 
maintained  the  proportional  difference  in  wages.  In  comparison 
with  the  other  trainmen,  the  engineers  have  lost  27.57  per  cent; 
with  firemen,  15.65  per  cent,  and  with  conductors  4.02  per  cent. 
In  other  words,  these  groups  have  each  gained  upon  the  engineers' 
compensation  to  the  extent  represented  by  the  respective  per- 
centages. Similar  relations  obtain  in  the  Southern  and  Western 
districts  and  for  the  United  States  as  a  whole. 

In  the  preceding  pages,  three  different  points  of  view  have 
been  presented  regarding  average  daily  compensation  based  upon 
figures  given  by  the  Interstate  Commerce  Commission,  for  the 
engineers,  conductors,  firemen  and  other  trainmen  for  the  Eastern, 
Western  and  Southern  districts  and  for  the  United  States  as  a 
whole.  In  presenting  these  points  of  view  it  is  not  the  intention 
of  the  Board  to  subscribe  to  any  theory  concerning  them.  Differ- 
ent persons  will  attach  different  values  to  the  different  points  of 


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RAILWAY  ENGINEERS  ARBITRATION 


77 


view.  Some  may  hold  that  one  should  be  selected  to  the  exclusion 
of  the  others.  Some  members  of  the  Board  in  reaching  their 
conclusions  have  had  in  mind  all  three  points  of  view.  This 
they  considered  legitimate  since  there  is  no  accepted  theory  regard- 
ing the  relations  which  should  obtain  in  the  wages  of  the  different 
classes  of  labor. 

In  summary  the  following  facts  appear:  The  difference  in  the 
average  daily  compensation  of  engineers  in  the  east  on  the  one 
hand,  and  in  the  south  and  west  upon  the  other  hand,  as  given  by 
the  Interstate  Commerce  Commission  figures,  is  not  great.  In  the 
Eastern  District  the  absolute  differences  between  the  engineers  and 
the  conductors  and  firemen  have  been  maintained.  There  has, 
however,  been  decline  in  the  relative  differentials.  In  both  of  these 
respects,  the  engineers  in  the  east  are  in  the  same  position  as  they 
are  in  the  west  and  south.  The  Board  holding  to  the  principle 
that  available  information,  rather  than  a  theory,  must  largely 
control  their  decision,  have  reached  the  conclusion  that  a  case  has 
not  been  made  for  an  advance  all  along  the  line  in  the  compensa- 
tion of  the  engineers. 

They  believe  that  in  view  of  all  the  facts  presented  with  regard 
to  the  compensation  of  engineers,  many  of  the  rates  in  existence 
give  reasonable  compensation  for  the  service  performed.  With 
regard  to  future  adjustments  of  the  wages  of  railway  employes, 
the  Board  give  their  judgment  in  a  later  part  of  this  report.  (See 
pages  86  to  108). 

THE   PRINCIPLE   OF  A  MINIMUM  WAGE 

While  the  Board  have  reached  the  above  conclusion,  the  evidence 
presented  shows  that  for  some  roads  and  for  certain  classes  of 
service  on  other  roads  the  compensation  is  too  small,  and  they 
have  therefore  taken  into  account  the  question  of  the  minimum 
wage  which  should  be  paid  in  the  territory  concerned. 

Many  trade  unions  have  succeeded  In  getting  the  principle 
recognized  that  for  any  class  of  service  there  should  be  a  mini- 


;»_   --^v^j'^^s*«»>*=^'1r  ^ 


78 


RAILWAY  ENGINEERS  ARBITRATION 


mum  compensation.  Throughout  the  United  States  a  minimum 
day's  work  is  recognized  for  railway  engineers.  If  the  general 
principle  which  has  been  worked  out  for  many  trades  be  adopted 
for  engineers,  this  would  lead  to  fixing  a  minimum  compensation 
for  each  class  of  service.  While  the  minimum  rates  established  by 
different  trade  unions  often  apply  only  to  a  city,  a  number  of 
them  are  sectional;  and  a  few,  national  in  their  scope.  There 
are  important  cases  of  the  minimum  rate  applying  to  a  com- 
petitive area.*  The  Eastern  District  of  the  United  States  may 
be  regarded  as  a  competitive  area  in  railroad  business,  and  the 
Board  can  see  no  reason  why  a  minimum  rate  for  engineers  should 
not  obtain  throughout  this  entire  district ;  especially  as  the  district 
has  been  treated  as  a  unit  in  negotiating  with  the  conductors  and 
other  trainmen. 

It  is  recognized  by  the  Board  that  upon  certain  roads  and  for  cer- 
tain classes  of  runs,  engineers'  wages  have  undoubtedly  lagged 
behind  the  average  compensation  for  the  district.  They  have 
therefore  adopted  the  principle  of  imposing  a  minimum.  It  is 
believed  by  the  Board  that  the  principle  of  a  minimum  is  sound, 
but  that  to  say  that  every  engineer  in  every  class  of  service  should 
have  the  same  compensation  cannot  be  defended.  Indeed,  the  en- 
gineers already  recognize  this,  since  they  ask  that  they  be  paid  in 
accordance  with  the  class  of  service  in  which  they  are  engaged.  In 
other  words,  the  engineers  recognize  that  the  character  of  the 
service  should  be  considered  in  fixing  the  compensation.  In  the 
opinion  of  the  Board  it  is  desirable  that  all  of  the  factors  which 
enter  into  the  nature  of  the  service  should  be  taken  into  account, 
and  that  the  more  arduous  and  difficult  service  should  have  greater 
compensation.  With  this  point  of  view,  the  Board  feel  that  at 
the  present  time  they  have  gone  as  far  toward  establishing  uniform-" 
ity  of  rates  of  pay  as  is  practicable,  by  introducing  a  minimum 
wage  for  each  of  the  more  important  classes  of  service. 

•The  Standard  Rate  in  American  Trade  Unions,  by  David  A.  McCabe, 
Johns  Hopkins  Press,  1912,  p.  10. 


a  f 


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THE  AWARDS 

In  view  of  the  foregoing  facts  and  considerations,  the  following 
awards  are  made  by  the  Board  regarding  the  various  matters 
submitted  for  arbitration. 

PASSENGER  RATES 

The  minimum  passenger  rate  for  engineers  shall  be  $4.25  for 
100  miles  or  less;  miles  made  in  excess  of  100,  pro  rata. 

Overtime  in  through  passenger  service  is  to  be  computed  on  the 
basis  of  20  miles  per  hour. 

All  passenger  overtime  will  be  paid  for  at  the  rate  of  50  cents 
per  hour  and  will  be  computed  on  the  minute  basis. 

This  award  is  without  prejudice  to  existing  higher  rates  on  differ- 
ent classes  of  engines. 

ELECTRIC  SERVICE 

Wherever  electric  service  is  installed  as  a  substitute  for  steam, 
or  is  now  in  operation  on  any  of  the  railroads  parties  to  this  arbitra- 
tion, or  on  any  of  the  tracks  operated  or  controlled  by  any  of  them 
as  part  of  their  system,  the  locomotive  engineers  shall  have  the 
preference  for  the  positions  of  engineers  or  motormen  on  electric 
locomotives  or  multiple  unit  trains;  but  this  right  of  the  engineers 
shall  not  operate  to  displace  any  man  operating  electric  power  on 
any  of  the  railroads  parties  to  the  agreement  on  May  1,  1912. 

Since  the  use  of  electric  locomotives  or  multiple  unit  trains  upon 
steam  railways  is  in  so  early  a  stage  of  development,  and  there  is  as 
yet  no  approximation  to  stable  conditions,  but  a  wide  variation  in 
existing  practices,  the  Board  found  themselves  unable,  from  the 
evidence  before  them,  to  make  any  uniform  rules  regulating  rates 
of  pay  and  conditions  of  service  for  engineers  or  motormen  em- 

79 


y 


^;^^1S5>>« 


80 


RAILWAY   ENGINEERS  ARBITRATION 


ployed  on  such  trains.  The  minimum  day's  wage  of  $4.25  in 
passenger  service  is,  however,  awarded ;  but  the  day's  work  covered 
by  the  same,  both  as  regards  hours  of  service  and  mileage  covered 
is  that  which  now  exists  in  the  electric  service  on  the  various  roads, 
not  that  covered  under  the  preceding  heading  ''Passenger  Service." 
This  award  is  without  prejudice  to  existing  contracts  for  such 
service. 

FREIGHT  RATES 

The  minimum  freight  rate  for  engineers  shall  be  $4.75  for  ten 
hours  or  less,  or  100  miles  or  less;  miles  made  in  excess  of  100, 
pro  rata. 

Overtime  in  freight  service  is  to  be  computed  on  the  basis  of 
10  miles  per  hour,  and  paid  for  pro  rata  on  the  minute  basis. 

Twenty-five  cents  per  100  miles  or  less  is  to  be  added  for  local 
freight  service,  to  through  freight  rates,  according  to  class  of  engines. 
Miles  over  100  to  be  paid  for  pro  rata. 

Through  freight  rates  will  apply  on  all  work,  wreck,  pusher  or 
helper,  mine  runs  or  roustabout,  circus  trains,  and  to  trains  estab- 
lished for  the  exclusive  purpose  of  handling  milk;  all  according  to 
class  of  engines;  overtime  is  to  be  computed  on  minute  basis. 

These  awards  are  without  prejudice  to  existing  higher  rates  on 
different  classes  of  engines. 

HELD   AWAY   FROM   HOME   TERMINAL 

Engineers  in  unassigned  freight  service  held  28  hours  at  other 
than  designated  home  terminals  without  performing  service,  are 
to  be  paid  overtime  rates  as  follows: — 10  hours  for  the  first  28 
hours  so  held,  and  10  hours  additional  overtime  for  each  complete 
24  hours  so  held  thereafter,  provided  that  this  regulation  does 
not  apply  to  engineers  delayed  by  reason  of  compliance  with  the 
law,  or  obstruction  of  the  line  through  act  of  Providence. 


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RAILWAY  ENGINEERS  ARBITRATION 


SWITCHING  SERVICE 


81 


Engineers  in  switching  service  shall  be  paid  at  a  minimum 
rate  of  $4.10  per  day,  10  hours  or  less  to  constitute  a  day's  work; 
all  time  over  10  hours  to  be  paid  for  pro  rata;  overtime  to  be 
computed  on  minute  basis;  time  to  begin  when  required  to  report 
for  duty,  and  to  end  at  the  time  engine  is  placed  on  designated 
track,  or  engineer  is  relieved  at  terminal. 

BELT  LINE  OR  TRANSFER  SERVICE 

The  Board  recognize  that  in  Belt  Line  or  Transfer  service  the 
grade  of  work  is  clearly  different  from  ordinary  switching  service, 
and  may  therefore  properly  be  entitled  to  a  higher  rate  of  pay; 
but  the  information  before  the  Board  shows  that  conditions  over 
the  Eastern  territory  vary  so  widely  in  this  service,  that  they  are 
unable  to  reach  an  agreement  regarding  a  fair  rate  for  such 
service.  The  Board,  therefore,  refer  the  question  of  Belt  Line  or 
Transfer  service  back  to  the  engineers  and  the  managements  of  the 
different  roads  for  local  settlements,  which  shall  take  into  consid- 
eration the  difference  between  Belt  Line  or  Transfer  service  and 
Switching  service,  in  fixing  the  rates  of  pay. 

BEGINNING  AND  ENDING  OP  A  DAY 

In  all  classes  of  road  service,  an  engineer's  time  will  commence 
at  the  time  he  is  required  to  report  for  duty,  and  will  conclude  at 
the  time  the  engine  is  placed  on  the  designated  track  or  relieved 
by  hostler  at  terminal. 

INITIAL  TERMINAL  DELAY 

Compensation  for  Initial  Terminal  Delay  is  not  allowed  beyond 
that  involved  in  the  rule,  that  pay  shall  begin  in  all  cases  at  the 
time  an  engineer  is  required  to  report  for  duty. 


Ci   t 


71 


82 


RAILWAY   ENGINEERS  ARBITRATION 


FINAL   TERMINAL   DELAY 


For  freight  service,  final  terminal  delay  shall  be  computed  from 
the  time  the  engine  reaches  designated  main  track  switch  connec- 
tion with  the  yard  track. 

For  passenger  service,  final  terminal  delay  shall  be  computed 
from  time  train  reaches  terminal  station. 

Final  terminal  delay,  after  the  lapse  of  one  hour,  will  be  paid 
for  at  the  end  of  the  trip,  at  the  overtime  rate,  according  to  class 
of  engine,  on  the  minute  basis. 

If  road  overtime  has  commenced,  terminal  overtime  shall  not 
apply,  and  road  overtime  will  be  paid  to  point  of  final  relief. 

HOURS   OF   SERVICE   LAW 

Amendment  of  Section  E  of  the  Application  of  the  Sixteen  Hour 
Law. 

Engineers  in  train  service  tied  up  under  the  law  will  be  paid 
continuous  time  from  initial  point  to  tie-up  point.  When  they 
resume  duty  on  continuous  trip,  they  will  be  paid  from  tie-up 
point  to  terminal  on  the  follo^ving  basis:  For  fifty  (50)  miles  or 
less,  or  five  (5)  hours  or  less,  fifty  (50)  miles  pay;  for  more  than 
fifty  (50)  miles  and  up  to  one  hundred  (100)  miles,  or  over  five 
(5)  hours  and  up  to  ten  (10)  hours,  one  hundred  (100)  miles  pay; 
over  one  hundred  (100)  miles,  or  over  ten  (10)  hours,  at  schedule 
rates.  It  is  understood  that  this  does  not  permit  running  engines 
through  terminals  or  around  other  crews  at  terminals  unless  such 
practice  is  permitted  under  the  pay  schedule. 

GENERAL   REGULATIONS 

1.  Existing  rates  of  compensation,  terms  of  pay,  and  rules  of 
service,  submitted  to  arbitration,  except  as  modified  by  the  above 
awards,  are  to  remain  in  force  until  the  end  of  the  period  of  award. 

2.  It  is  understood  that  existing  rates  of  pay  or  better  working 
conditions  shall  not  be  reduced  by  the  rates  or  rules  hereby  agreed 


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RAILWAY  ENGINEERS   ARBITRATION 


83 


upon;  nor  shall  General  Committees  of  Adjustment  be  debarred 
from  taking  up  with  their  respective  managers  matters  not  decided 
by  the  Board  of  Arbitration. 

3.  The  awards  shall  be  effective  as  of  May  1,  1912,  except 
the  award  regarding  "Held  Away  from  Home  Terminal"  and  the 
award  regarding  ''Final  Terminal  Delay/^  which  awards  are  to 
take  effect  November  1,  1912. 

SUPPLEMENTARY   EXPLANATION 

The  awards  need  little  further  explanation  beyond  that  already 
given.  In  general  they  may  be  summarized  under  the  principle 
that  a  minimum  wage  should  obtain,  and  that  the  rules  of  service 
should  be  as  fair  and  uniform  as  practicable. 

In  fixing  the  minimum  wage  in  passenger  service  at  $4.25  per 
day  in  the  Eastern  District,  a  higher  minimum  rate  is  established 
than  that  which  now  exists  upon  all  but  a  few  of  the  roads. 

In  adopting  the  principle  that  in  through  passenger  service  over- 
time shall  be  computed  on  the  basis  of  20  miles  per  hour  a  distinct 
advance  is  made.  While  this  rule  is  rather  general  in  the  south, 
this  is  not  true  of  the  west.  But  since  it  seems  a  reasonable 
basis  upon  which  to  calculate  overtime  in  through  passenger 
service,  this  award  is  made. 

In  awarding  a  minimum  through  freight  rate  of  $4.75  per  day, 
a  rate  is  established  that  measurably  approaches  the  current 
minima  on  roads  now  paying  the  better  rates. 

The  awards  carry  further  increases  of  compensation  to  engi- 
neers in  that  they  classify  as  through  freight,  for  the  purpose  of 
pay,  work  trains,  wreck  trains,  pusher  or  helper  service,  mine  run 
or  roustabout,  circus  trains  and  some  milk  trains, — the  pay  for  each 
being  according  to  class  of  engines. 

The  request  of  the  engineers  for  an  increase  of  25  cents  for  100 
miles  or  less,  ten  hours  or  less,  for  local  freight  service  is  granted, 
since  this  service  involves  additional  work,  as  compared  with  other 
freight  service. 


i 


y 


84 


RAILWAY  ENGINEERS  ARBITRATION 


In  regard  to  the  beginning  and  ending  of  a  day^s  work,  it 
seemed  to  the  Board  that  there  could  be  no  possible  reason  why 
an  engineer's  compensation  should  not  begin  at  the  time  he  is 
required  to  report  for  duty,  and  continue  to  the  time  he  is  relieved 
from  duty.  Therefore,  the  principle  has  been  applied  that  an 
engineer  should  be  paid  for  the  entire  time  he  is  on  duty. 

The  same  principle  which  leads  the  Board  to  make  their  award 
regarding  the  beginning  and  ending  of  the  day  applies  to  over- 
time. It  should  be  given  on  the  basis  of  actual  time  required;  and 
hence  the  award  is  made  that  overtime  be  computed  upon  the 
minute  basis. 

In  regard  to  Final  Terminal  Delay: — It  has  been  suggested  upon 
one  side  that  the  engineer  has  done  his  duty  when  he  reaches 
the  yard  limits,  and  upon  the  other  side  that  before  he  is  paid 
for  any  delay  at  the  terminal  he  should  have  completed  his  full 
minimum  day's  work  in  hours.  It  seems  to  the  Board,  however, 
that  if  an  engineer  has  made  a  good  run  and  reached  the  entrance 
to  his  terminal,  the  road  should  not  be  allowed  to  hold  him 
there  indefinitely.  It  is  clear  that  the  duty  of  an  engineer  is  not 
complete  when  he  reaches  the  switch  to  the  terminal;  he  has  the 
duty  of  placing  his  train  at  the  designated  place  in  the  terminal, 
and  the  additional  duty,  after  this,  of  taking  his  engine  to  the 
roundhouse.  Under  favorable  conditions  this  work  would  occupy 
a  portion  of  an  hour.  The  Board  realizes  that  often,  during  times 
of  congested  business,  it  is  not  possible  to  get  a  train  to  its  place 
in  the  yard,  and  the  engine  to  the  roundhouse  promptly.  If  the 
roads  do  not  make  it  possible  for  the  engineers  to  complete  their 
work  within  the  hour  after  reaching  the  yard,  it  is  the  opinion  of 
the  Board  that  time  beyond  this  hour  should  be  paid  for  as 
overtime. 

Regarding  Initial  Terminal  Delay : — Having  made  the  award  that 
time  should  begin  as  soon  as  a  man  is  required  to  report  for  duty, 
the  arbitrators  do  not  in  addition  to  this  recognize  that  there 
should  be  payment  for  initial  terminal  delay,  since  this  time  will 


-I 


4 

1     y 


» 


RAILWAY   ENGINEERS   ARBITRATION 


85 


be  regularly  paid  for  as  a  part  of  a  minimum  day's  work;  and 
if  men  are  held  at  the  initial  terminal  for  a  considerable  period, 
this  may  result  in  extending  the  time  beyond  the  minimum  of  ten 
hours,  or  five  hours  in  the  case  of  through  passenger  service,  and  in 
giving  compensation  for  overtime  at  the  end  of  the  trip  in  those 
cases  in  which  the  initial  terminal  delay  is  unreasonably  long. 

The  award  regarding  the  allowances  made  when  men  are  held 
away  from  their  home  terminal  is  in  general  accord  with  the 
principle  now  in  force  on  several  of  the  important  roads  in  the 
Southern  District. 


y 


T 


GENERAL  CONSIDERATIONS 

The  Board  of  Arbitration  might  be  regarded  as  having  per- 
formed their  assigned  task  in  making  the  preceding  awards.  But 
the  investigations  of  the  Board  have  necessarily  led  them  to 
consider  the  broader  aspects  of  the  problems  before  them;  and 
because  of  this  they  present  certain  general  considerations  to 
the  railroad  managers,  to  the  engineers,  and  to  the  general  public. 


Mil 


COMMISSION  CONTKOL  OF  PUBLIC  UTILITIES 

Until  within  a  few  years  the  holders  of  railroad  bonds  and 
stocks  regarded  the  railroads  as  exclusively  their  private  property, 
with  which  they  were  free  to  do  substantially  as  they  pleased. 
The  roads  were  operated  precisely  in  the  same  spirit  as  industrial 
enterprises.  The  controlling  idea  was  to  give  the  largest  return 
to  the  owners  of  the  stocks.  It  is  of  course  true  that  many 
railroad  managers  realized  that  they  had  certain  public  responsi- 
bilities, but  the  latter  were  often  regarded  as  secondary  con- 
siderations. 

Only  slowly  and  reluctantly  did  the  majority  of  railroad  men 
yield  to  public  control;  and  even  now,  some  of  the  operators  hold 
the  older  attitude  to  be  correct,  although  admitting  that  it  can 
no  longer  be  followed  in  practice.  The  railroads,  being  common 
carriers,  require  public  franchises,  and  therefore  have  all  of  the 
obligations  of  pubhc  utilities.  But  the  public  has  only  gradually 
asserted  its  authority  over  them.  As  early  as  1869  the  state  of 
Massachusetts  established  a  railroad  commission.  California  did 
the  same  in  1876,  New  York  in  1882.  But  these  early  com- 
missions, and  those  of  other  states,  did  not  attempt  any  large 
control.  Indeed,  they  did  not  have  authority  to  do  so.  Their 
power  was  usually  limited  to  that  of  recommendations  to  the 
attorney-general.     Illinois  created  a  railroad  commission  in  1871, 

86 


RAILWAY  ENGINEERS  ARBITRATION 


87 


i 


y 


which  in  1873  was  given  power  to  prescribe  rates;  but  little  in  the 
way  of  effective  regulation  was  accomplished  during  this  decade. 

While  in  Iowa  there  was  early  legislation  looking  toward  the 
control  of  railroads,  in  1897  a  law  was  passed  which  went  a  long 
way  towards  assuming  control  within  that  state.  The  rates  were 
to  be  ''reasonable,^'  and  the  findings  of  the  commission  were  to 
be  prima  facie  evidence  of  the  reasonableness  of  the  rates.  The 
state  of  Wisconsin  in  1905  enacted  an  even  more  comprehensive 
and  effective  law  under  which  the  commission  was  given  ample 
power  to  control  the  rates  charged  wathin  the  state.  The  example 
of  Iowa  and  Wisconsin  has  been  followed  by  many  other  states. 

The  Interstate  Commerce  Commission,  when  it  was  created  in 
1887,  had  the  power  of  investigation;  but  it  could  go  no  further 
than  to  recommend  reparation  in  case  of  just  complaint.  It 
was,  in  fact,  a  purely  advisory  body.  Not  until  1906  was  the 
law  so  amended  by  Congress  as  to  give  to  the  Interstate  Com- 
merce Commission  the  power  to  fix  maximum  rates.  In  1910 
the  Commission  was  given  the  further  power  to  suspend  any 
increase  of  rates  pending  investigation.  Thus,  it  is  only  six 
years  ago  that  the  national  government  has  asserted  its  broad 
authority  to  control  the  rates  which  railroads  may  charge  in 
interstate  commerce. 

LABOR  ORGANIZATIONS  AND  WAGES 

Under  the  old  regime,  in  which  the  railroad  operators  scarcely 
recognized  the  fact  that  the  railroads  were  public  utilities,  rail- 
way labor  controversies  were  usually  conducted  like  those  of  the 
great  industrial  corporations.  Each  side  made  the  best  bargain 
that  was  practicable.  So  long  as  railroad  labor  was  unorganized, 
the  advantage  in  wage  bargaining  was  strongly  with  the  railroad 
operators;  and  this  is  still  the  situation  in  regard  to  those  classes 
of  labor  that  are  unorganized  or  poorly  organized.  Gradually, 
however,  the  different  classes  of  railroad  employes  began  form- 
ing organizations.    One  of  the  earliest  of  these  was  the  Brother- 


88 


RAILWAY  ENGINEERS   ARBITRATION 


I 


hood  of  Locomotive  Engineers,  founded  in  1863,  now  numbering 
some  72,000  members,  and  having  more  than  two  hundred  wage 
arrangements  or  contracts  with  the  railroads  in  North  America. 
Early  in  its  history  this  organization  included  among  its  members 
a  large  proportion  of  the  locomotive  engineers  of  the  United 
States,  and  ultimately  acquired  a  strength  in  wage  bargaining 
comparable  with  that  of  the  operators.  The  latter,  however, 
did  not  recognize  this  fact  until  after  a  number  of  serious  strikes. 
The  last  of  these  great  strikes  was  that  upon  the  Burlington  road 
in  1888.  This  strike,  according  to  the  present  Grand  Chief  of 
the  Brotherhood,  cost  the  engineers  two  millions  of  dollars  and 
the  railroads  several  times  that  amount. 

There  have  also  been  conductors'  strikes,  firemen's  strikes, 
trainmen's  strikes,  etc.  While  the  Burlington  strike  was  lost 
by  the  engineers,  the  enormous  cost  both  to  the  road  and  to  the 
men  was  such  as  to  make  each  side  reluctant  to  resort  to  the 
settlement  of  labor  controversies  by  means  of  industrial  war- 
fare. 

At  the  present  time,  when  the  railroads  as  public  utilities  are 
subject  to  the  Interstate  Commerce  Commission  and  to  the  State 
Commissions  in  so  many  respects  that  some  of  the  railroads  feel 
that  the  power  of  the  government  over  their  property  is  greater 
than  that  of  the  operators  themselves;  and  when  the  railroads 
are  subject  to  the  dominant  pressure  of  public  opinion,  the  oper- 
ators generally  feel  that  they  can  no  longer  justify  the  settle- 
ment of  a  labor  controversy  by  a  strike.  The  strongly  organized 
employes  have  from  time  to  time  asked  and  obtained  higher 
wages.  The  facts  presented  to  the  Board  show  that  the  loco- 
motive engineers  have  had  several  increases  in  wages  since  1900, 
especially  in  1903,  1907,  and  1910.  It  is  not  to  be  understood, 
however,  that  the  advances  were  the  same  on  each  of  the  rail- 
roads, nor  that  they  took  effect  at  precisely  the  same  time,  nor 
on  all  the  railroads;  but  that  in  certain  years  during  this  period 
there  has  been  a  general  advance  in  wages,  the  particular  adjust- 


RAILWAY   ENGINEERS   ARBITRATION 


89 


ment  being  made  in  each  case  by  conferences  between  the  rail- 
way officials  and  local  committees  of  the  engineers. 

In  the  opinion  of  the  Board,  the  balance  of  power  in  the  con- 
trol of  wages,  which  was  first  with  the  railroads  has  now  passed 
to  organized  railway  labor.  The  railroad  operators,  under  the 
control  of  national  and  state  commissions,  and  under  the  control 
of  public  opinion,  are  weaker  than  strongly  organized  unions.  The 
latter,  without  any  control  through  commissions,  are  of  course 
also  affected  by  public  opinion,  but  not  so  directly. 


-^ 


THE  SERIOUS  NATURE  OF  A  CONCERTED  STRIKE 

Never  in  the  history  of  the  United  States  has  there  been  a 
concerted  strike  on  all  the  railroads  of  a  great  section  of  the  coun- 
try. The  strikes  have  usually  been  upon  individual  roads,  al- 
though in  some  cases  strikes  have  taken  place  upon  a  number 
of  roads  at  the  same  time.  The  present  arbitration,  involving 
as  it  does  a  concerted  movement  affecting  fifty-two  railroads, 
is  therefore  a  new  phase  of  development. 

On  January  27,  1912,  the  locomotive  engineers  made  uniform 
requests  upon  all  the  railroads  in  the  Eastern  District.  The 
railroads  affected  by  these  demands  had  in  1910  an  aggregate 
of  66,876  miles  of  main  track,  as  compared  with  266,185  for  the 
whole  United  States,  or  25.1  per  cent  of  the  total  mileage.  These 
railways  represent  nearly  40  per  cent  of  the  aggregate  revenues 
and  expenses  of  all  the  railways  of  the  United  States;  from  42  to 
47  per  cent  of  the  traffic;  something  over  40  per  cent  of  the  total 
number  of  employes,  of  the  number  of  engineers,  and  of  the  com- 
pensation of  these  employes.  The  population  of  the  great  region 
immediately  affected  by  this  movement  is  over  38,000,000,  as 
compared  with  approximately  54,000,000  for  the  remainder  of  the 
country — or  about  42  per  cent  of  the  total  population.  If  we 
assume  that  the  wealth  of  the  region  is  in  proportion  to  the  amount 
of  railroad  traffic  and  to  the  density  of  population,  it  may  be 
fairly  concluded  that  the  territory  affected  by  this  demand  repre- 


i-  r » 


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wmmt. 


tkmnfiM'B'^VMIg^^M 


mssm 


■MiJllUi 


90 


RAILWAY  ENGINEERS    ARBITRATION 


sents  at  least  four-tenths  of  the  wealth  of  the  country.  As  we 
have  seen,  the  managers,  after  several  conferences  with  the  loco- 
motive engineers,  refused  to  accede  to  the  requests  of  the  engineers. 
The  question  of  a  strike  was  then  submitted  to  the  men.  The 
vote  showed  93.3  per  cent  of  the  men  in  favor  of  a  strike,  provided 
a  satisfactory  settlement  could  not  be  made.  All  that  was  nec- 
essary^ for  a  strike  to  take  place  was  the  assent  of  the  Grand 
Chief  Engineer  in  conjunction  with  the  general  committees  of 
the  different  railroads.  This  assent  is  necessary,  for  if  a  strike 
is  voted  by  the  members  of  the  Brotherhood,  the  Grand  Chief 
has  the  veto  power. 

At  the  hearings  of  the  arbitration  it  seemed  to  be  the  opinion 
of  the  parties  concerned  that  if  the  engineers  had  declared  a 
strike,  it  would  have  effectively  tied  up  the  railroads  in  the  East- 
ern District. 

An  effective  strike  on  these  railroads,  extending  through  an  area 
that  includes  all  of  New  England,  New  York,  New  Jersey,  Penn- 
sylvania, Delaware,  Maryland,  Ohio,  Indiana,  the  lower  Peninsula 
of  Michigan,  much  of  lUinois,  and  a  small  part  of  West  Virginia, 
would  have  had  most  disastrous  effects  upon  the  commerce  and  in- 
dustry of  this  entire  region,  to  say  nothing  of  its  effects  upon  the 
remainder  of  the  country.  Indeed,  it  would  be  difficult  to  exag- 
gerate the  seriousness  of  such  a  calamity.  While  no  statistics  on  the 
subject  are  available  it  is  safe  to  say  that  the  large  cities  of  the 
East,  if  the  strike  had  taken  place,  would  have  found  their  supply 
of  many  articles  of  food  exhausted  within  a  week.  Of  so  impor- 
tant a  commodity  as  milk  the  cities  have  not  usually  more  than 
a  day's  supply.  Many  of  the  people  in  the  cities  would  therefore 
have  been  short  of  food  if  the  strike  had  taken  place.  Assuming 
that  no  damage  were  done  to  their  property,  the  loss  of  the 
railroads  through  cessation  of  business  would  have  been  enormous. 
The  total  operating  revenues  of  the  fifty-two  railroads  concerned 
amount  to  over  twenty  million  dollars  a  week,  and  the  net  operat- 
ing revenue  to  nearly  seven  million  dollars  a  week.     The  loss  to 


-i 


<    ;    y 


4 


5 


RAILWAY  ENGINEERS  ARBITRATION 


91 


the  engineers  would  likewise  have  probably  run  into  the  millions. 
Their  present  payroll  amounts  to  over  $800,000  per  week.  (Rail- 
road Exhibit  67  A.) 

But  the  loss  to  the  public  would  have  been  vastly  larger  than 
that  of  both  parties  to  the  conflict.  Of  necessity,  building  oper- 
ations and  many  other  lines  of  employment  would  have  ceased 
in  whole  or  in  part;  for  not  only  are  the  people  of  the  great  cities 
dependent  upon  the  railroads  for  their  daily  food-supply,  but  the 
great  industries  depend  on  the  railroads  daily  for  their  materials, 
and  a  week's  failure  on  the  part  of  the  railroads  to  deliver  mate- 
rials to  the  manufacturers  would  have  made  it  necessary  for  many 
to  shut  down  even  if  the  owners  had  wished  to  continue  them  in 
operation.  But  in  any  case  many  of  the  owners  would  have  been 
compelled  to  shut  down  their  plants,  inasmuch  as  they  could  not 
afford  to  continue  manufacturing  articles  of  commerce  which  they 
had  no  means  of  transporting  to  the  places  of  sale. 

It  thus  appears  if  a  strike  of  railway  employes  were  successful 
in  stopping  traffic,  its  effects  upon  the  industry  of  the  country 
would  be  analogous  to  those  of  a  general  strike,  simply  because 
a  great  number  of  other  industries  could  not  continue  if  the  rail- 
roads ceased  to  operate.  Such  a  strike  would  have  at  least  the 
partial  effect  of  a  universal  strike,  forced  upon  the  public,  and 
even  the  willing  workers  in  other  branches  of  industry.  In  cer- 
tain general  strikes  of  some  foreign  countries  there  have  been 
exceptions  made  of  certain  employments  necessary  to  human  exis- 
tence; but  in  a  suspension  of  business  through  stoppage  of  all 
transportation  there  would  be  no  exception. 

A  case  in  the  United  States  somewhat  analogous  to  a  railway 
strike  for  an  entire  region  was  the  anthracite  coal  strike  in  1902, 
where  the  stoppage  of  coal  supply  to  a  great  commercial  and  man- 
ufacturing interest  was  deemed  a  calamity  which  compelled  the 
intervention  of  the  President  of  the  United  States.  However 
the  stoppage  of  the  anthracite  coal  supply  was  not  nearly  so  seri- 
ous as  would  be  the  stoppage  of  railway  traflSc,  for  bituminous 


Ci  ^ 


i 


92 


RAILWAY  ENGINEERS   ARBITRATION 


RAILWAY  ENGINEERS  ARBITRATION 


93 


coal  can  in  an  emergency  in  large  measure  take  the  place  of  anthra- 
cite; but  there  is  nothing  under  modem  conditions  that  can  take 
the  place  of  the  railroads  for  transportation. 

In  short,  a  general  strike  on  the  railroads  for  a  great  section 
of  the  country  would  have  paralyzed  the  industries  of  that  section; 
and,  even  if  food  were  obtainable,  millions  of  laboring  people  would 
have  felt  the  pinch  of  want.  If  a  strike  of  the  character  indi- 
cated lasted  only  for  a  single  week,  the  suffering  would  have  been 
beyond  our  power  of  description;  and  if  it  had  continued  for  a 
month,  the  loss,  not  only  in  property,  but  in  life,  would  have 
been  enormous.  Also,  as  usual  in  such  cases,  the  disaster  would 
have  fallen  most  heavily  upon  those  least  able  to  bear  it.  While 
the  rich  might  have  felt  themselves  poorer  because  of  depleted 
bank  accounts,  they  would  have  had  sufficient  for  the  necessities 
of  life.  The  middle  classes  would  have  been  injured  financially; 
but  still  they  could  have  subsisted.  The  working  classes  would 
have  suffered  acutely.  They  would  have  been  the  ones  to  feel 
soonest,  longest,  and  most  intensely  the  unspeakable  calamity  of 
a  general  railroad  strike. 

At  first  thought  it  may  appear  that  this  picture  is  overdrawn. 
But  it  should  be  remembered  that  never  has  a  railroad  strike 
affected  an  entire  region  of  the  United  States.  There  have  been 
strikes  on  particular  railroad  systems.  In  such  cases  the  neigh- 
boring roads  took  care  of  the  more  pressing  necessities  of  the 
great  terminal  centers,  and  there  was  no  acute  suffering  except 
at  minor  points  served  exclusively  by  one  railroad  system. 

THE  GENERAL  RAILWAY  STRIKE  IN  FRANCE 

A  general  strike  for  the  eastern  territory  would  put  the  eastern 
states  in  much  the  same  situation  as  France  was  placed  two 
years  ago,  when  there  was  a  general  strike  on  the  railroads  of 
that  country. 

On  October  12,  1910,  the  National  Federation  of  Railway  Em- 
ployes of  France  and  the  Federation  of  Unions  of  Railway  Engi- 


-( 


v 


neers  and  Firemen  of  France  called  a  general  strike  on  all  the  rail- 
ways of  the  country.  Immediately  afterwards  work  came  nearly 
to  a  standstill  on  the  northern  and  western  lines  and  the  next  day 
the  strike  extended  to  a  number  of  other  lines.  In  ordering  this 
strike  the  men  asserted  it  was  their  legal  right  to  cease  work. 

At  various  places  during  the  strike  there  were  acts  of  violence, 
"  trains  were  held  up,  signals  destroyed,  rails  ripped  from  the  ties, 
telephone  and  telegraph  wires  cut."  Many  cities  and  towns  were 
threatened  with  famine.  There  was  immediately  a  large  increase 
in  the  price  of  food.  In  this  respect  Paris  fared  better  than  some 
of  the  smaller  towns,  because  of  the  prompt  use  of  the  Seine  in 
bringing  in  food  from  the  sea. 

The  government  appreciated  at  once  that  if  this  general  railway 
strike  were  allowed  to  continue,  the  nation  would  be  paralyzed. 
Therefore  upon  the  very  day  that  the  general  strike  was  declared, 
the  Ministers,  using  their  full  authority  under  military  laws, 
called  for  the  mobilization  of  the  strikers,  commanding  them  the 
following  day  to  join  the  colors  for  three  weeks*  military  training. 
The  military  duty  to  which  the  employes  were  summoned  con- 
sisted in  the  maintenance  of  the  railways  in  normal  working  order 
and  in  obeying  the  orders  of  their  official  superiors.  Disobedience 
would  entail  the  punishment  provided  for  by  military  law.  The 
government  announced  that  the  roads  would  be  operated  and 
the  people  of  Paris  would  be  fed. 

So  effective  was  the  action  of  the  government  that  J)y  the  day 
following  the  strike  a  sufficient  number  of  men  had  obeyed  orders 
so  that  many  passenger  trains  were  running  into  Paris. 

The  strike  of  the  railway  men  was  regarded  by  the  public  in 
general  as  an  act  of  criminal  violence;  indeed  the  Ministry  stated 
that  the  strike  put  the  country  in  a  condition  of  civil  war.  The 
action  of  the  government  with  the  prompt  support  of  public  opin- 
ion, led  the  railway  labor  organizations  on  the  18th  of  October 
to  declare  the  strike  terminated.  Thus  the  total  duration  of  the 
attempt  for  a  general  railway  strike  was  six  days. 


S' 


4 


ifrfBri 


94 


RAILWAY  ENGINEERS  ARBITRATION 


RAILWAY  ENGINEERS  ARBITRATION 


95 


In  the  later  discussions  in  Parliament  the  principle  advocated 
by  M.  Aristide  Briand  and  the  Ministry  was  accepted,  "that 
public  servants  must  be  required  to  discharge  their  duties  regu- 
larly and  without  interruption."  Indeed,  so  imperative  was  it 
considered  for  the  welfare  of  France  that  the  railways  be  oper- 
ated that  in  the  discussion  in  the  Chamber,  October  28,  M.  Briand, 
declared  that  "if  the  government  had  not  found  in  the  law  that 
which  enabled  it  to  remain  master  of  the  frontiers  of  France,  and 
master  of  its  railways,  which  are  indispensable  instruments  of 
the  national  defense,  if,  in  a  word,  the  government  had  found 
it  necessary  to  resort  to  illegality,  it  would  have  done  so."*  This 
he  regarded  as  defensible  under  the  doctrine  Salus  publica  su- 
prema  lex. 

THE  EASTERN  DISTRICT  AND  FRANCE  COMPARED 

In  connection  with  this  arbitration  it  should  be  remembered 
that  the  population  in  1910  of  the  territory  concerned  was 
more  than  38,000,000,  whereas  the  population  of  France  in  1911 
was  39,601,509.  The  great  congested  centers  of  the  Eastern 
District  are  much  larger  and  more  numerous  than  those  of 
France.  The  figures  in  the  United  States  as  given  by  the  census 
of  1910,  and  in  France  for  1911,  are  as  follows:  New  York  City, 
population  4,766,883,  is  larger  than  Paris,  2,888,110;  Philadelphia, 
1,549,008,  is  nearly  three  times  as  large  as  Marseilles,  550,619; 
Boston,  670,585,  is  considerably  larger  than  Lyons,  523,796.  In 
France  the  only  other  two  cities  which  exceed  200,000  in  popula- 
tion are  Bordeaux,  261,678,  and  Lille,  217,807;  whereas  in  the 
eastern  part  of  the  United  States,  there  are  three  other  cities 
that  exceed  500,000 — Cleveland,  Baltimore,  and  Pittsburgh;  two 
that  exceed  400,000 — Detroit  and  Buffalo;  three  that  exceed  300, 
000 — Cincinnati,  Newark  and  Washington;  and  four  that  exceed 
200,000, — Jersey  City,  Indianapolis,  Providence  and  Rochester. 

The  area  of  the  country  involved  in  this  arbitration  is  one  and 

♦  The  New  International  Year  Book,  1910,  pp.  269-271. 


s- 


one-half  times  as  great  as  that  of  France.  The  main  track  mileage 
of  the  Eastern  District  is  66,876  miles,  whereas  that  of  France 
is  only  about  36,000. 

Thus  the  comparison  of  a  strike  on  the  railroads  of  the  Eastern 
District  with  a  general  railroad  strike  in  France  is  justifiable  from 
every  point  of  view, — that  of  the  mileage  of  the  railroads  concerned, 
that  of  population  as  a  whole,  the  size  of  the  cities,  and  the  terri- 
tory involved. 

THE  PUBLIC  INTEREST  PARAMOUNT 

It  is  evident  therefore  that  for  a  great  section  of  the  United 
States  a  railroad  strike  can  no  longer  be  considered  as  a  matter 
which  primarily  affects  the  railroad  operators  and  employes. 
It  does  affect  them  and  affects  them  seriously;  but  the  public 
is  far  more  deeply  concerned.  Indeed,  the  interests  of  the  public 
so  far  exceed  those  of  the  parties  to  a  controversy  as  to  render 
the  former  paramount.  To  this  paramount  interest,  both  the 
railroad  operators  and  employes  should  submit.  It  is  therefore 
imperative  that  some  other  way  be  found  to  settle  differences 
between  railroads  and  their  employes  than  by  strikes. 

If  in  the  United  States  there  were  a  general  strike  for  the  eastern 
territory  comprising  as  we  have  seen  two-fifths  of  the  population 
and  approximately  half  the  wealth  of  the  country,  every  effort 
would  undoubtedly  be  made  to  terminate  the  strike  promptly 
and  to  operate  the  railroads,  even  though  it  became  necessary 
for  the  President  of  the  United  States  and  the  governors  of  the 
states  to  act  in  concert  to  the  extreme  limits  of  the  laws  and  their 
reserve  powers,  which  at  times  of  national  emergency  are  large. 
The  military  forces,  both  state  and  national,  would  undoubtedly 
be  available  if  necessary  to  prevent  any  interference  with  the  men 
who  desired  to  work;  but  it  is  not  easy  to  see  how  more  than  a 
fraction  of  the  number  of  engineers  necessary  to  run  the  railroads 
could  be  secured  promptly.  Hence  the  probable  consequences 
of  an  effective  engineers'  strike  would  be  those  already  described. 


**-( 


h^mmri^c-i^^s!r::2i^ 


--r'-i=,..^   .>*.-    yy-;t'^-j  ^"v.^lJ<f'M-^-'^-<;  *^'-'^-r^V'"''^V^'^ 


96 


RAILWAY  ENGINEERS  ARBITRATION 


THE  INCREASING  POWER  OF  ORGANIZED  LABOR 


It  appears  clear,  therefore,  to  the  Board  that  in  the  future  a 
controversy  between  the  railroads  of  a  great  region  of  the  United 
States  and  organized  labor  should  be  settled  in  some  other  way 
than  by  strike.  If  this  position  be  sound,  and  the  railroad  opera- 
tors accept  it,  they  are  manifestly  helpless  when  labor  organiza- 
tions ask  for  higher  wages  and  threaten  that  if  their  requests  are 
not  granted  they  will  proceed  to  strike.  If  the  above  is  a  correct 
diagnosis  of  the  situation,  the  Board  doubt  whether  the  railroad 
employes  fully  realize  their  power.  But  if  they  have  not  realized 
it  fully,  they  have  realized  it  sufficiently  to  take  advantage  of  the 
situation,  and  to  vote  a  strike  for  the  Eastern  District. 

The  recent  progress  of  the  concerted  movement  very  clearly 
shows  the  developing  sense  of  power  of  the  railway  employes. 
Until  1902,  in  the  settlement  of  difficulties  between  the  employes 
and  the  railroads,  usually  no  larger  unit  than  a  railroad  system  was 
concerned.  If  a  settlement  could  not  be  made  for  a  railway  system 
there  might  be  a  strike,  and  while  some  of  such  strikes  led  to  great 
disasters,  they  did  not  result  in  national  calamities.  The  con- 
certed movement  was  first  used  by  the  conductors,  trainmen,  and 
yardmen.  These  employes  have  taken  part  in  four  concerted 
movements, — two  of  them  in  the  West  (in  1902  and  in  1907); 
in  the  East  there  was  a  concerted  movement  of  the  same  classes 
of  employes  in  1910;  a  concerted  movement  in  the  South  has 
just  been  terminated.  For  the  engineers  in  the  West,  there  have 
been  two  concerted  movements, — the  first  in  1906,  the  second 
in  1910.  In  the  Southern  District  there  have  also  been  two  con- 
certed movements  of  engineers,  one  in  1907  and  another  in  1911. 
The  present  arbitration  represents  the  result  of  the  first  concerted 
movement  of  the  engineers  in  the  East.  The  firemen  of  the 
West  made  concerted  movements  in  1907  and  1909,  and  a  third 
concerted  movement  has  now  been  begun  by  the  firemen  in  the 
Eastern  District.    Early  in  1908  there  was  a  concerted  movement 


4 


RAILWAY  ENGINEERS  ARBITRATION 


97 


of  engineers,  firemen,  conductors,  and  trainmen  on  all  the  West- 
em  roads,  with  reference  exclusively  to  rules  covering  compensa- 
tion of  men  tied  up  under  federal  and  state  laws. 

It  thus  appears  that  the  first  concerted  movement  was  made 
in  1902;  that  until  1906  no  other  concerted  movement  was  made; 
and  that  twelve  important  concerted  movements  have  been  made 
between  1906  and  the  present  time  by  various  classes  of  railway 
employes  in  the  United  States.  An  advantage  of  the  concerted 
movement  is  that,  affecting  as  it  does  an  entire  section  of  the  coun- 
try, the  employes  find  that  the  railroad  officials  will  settle  either 
directly  through  mediation,  or  by  arbitration,  rather  than  permit 
a  strike;  in  short,  the  operators  in  such  cases  have  not  taken  the 
responsibility  of  forcing  a  wage  settlement  by  strike. 

In  the  case  under  arbitration,  as  already  indicated,  the  only  requi- 
site still  lacking  for  a  strike,  sanctioned  by  a  vote  of  93.3  per  cent  of 
the  engineers,  was  the  approval  of  the  Grand  Chief  of  the  Brother- 
hood of  Locomotive  Engineers  in  conjunction  with  the  committee 
having  the  matter  in  charge.  It  lay  within  the  power  of  this  group 
of  men  to  decide  whether  or  not  a  strike  should  take  place. 
It  is  true  that  the  power  was  not  exercised,  and  that  steps  were 
taken  which  resulted  in  arbitration;  but  the  threat  of  this  power 
clearly  appeared.  From  the  view  point  of  the  public  it  is  an  intol- 
erable situation  when  any  group  of  men,  whether  employes  or 
employers,  whether  large  or  small,  have  the  power  to  decide  that 
a  great  section  of  the  country  as  populous  as  all  of  France  shall 
undergo  great  loss  of  life,  unspeakable  suffering,  and  loss  of  prop- 
erty beyond  the  power  of  description,  through  the  stoppage  of  a 
necessary  public  service.  This,  however,  is  the  situation  which 
confronts  us  as  a  nation.  It  certainly  is  sufficiently  grave  to  justify 
the  Board  in  giving  most  serious  consideration  to  the  solution  of 
the  problem  of  determining  what  shall  be  the  obligations  of  all  of 
those  upon  whom  devolves  the  continuous  operation  of  our  public 
utilities,  and  particularly  the  railroads. 


'nur-r^S-y 


"n-vtiWW^!^ 


98 


RAILWAY  ENGINEERS   ARBITRATION 


LIMITATIONS  OF  THE  PRESENT  BOARD 


As  we  have  already  pointed  out  in  the  body  of  our  report,  a 
Board  constituted  like  the  present  one  has  limitations.  They 
have  not  the  machinery  for  convenient  consideration  of  the  mat> 
ters  at  issue.  Without  delays  which  would  have  appeared  unreas- 
onable— which,  indeed,  would  have  postponed  the  awards  far 
beyond  the  time  at  which  the  Board  were  expected  to  announce 
their  findings — it  would  have  been  impossible  to  give  the  study  that 
might  have  led  to  the  formation  of  a  complete  and  unqualified 
judgment  on  all  points.  Under  the  circumstances,  therefore, 
which  afifect  the  present  extremely  complex  case,  the  Board  have 
made  all  reasonable  expedition  in  reaching  conclusions  upon  the 
facts  available  and  the  arguments  presented. 

The  members  of  the  Board  are  fully  conscious  of  the  grave  impor- 
tance of  the  case  before  them,  whether  it  be  measured  in  terms  of 
the  amount  of  money  involved  or  determined  by  the  far-reaching 
effects  that  a  general  railroad  strike  on  the  Eastern  railroads  would 
have  upon  the  well-being  of  the  people  in  a  large  section  of  the 
country.  The  amount  directly  at  issue  is  estimated  at  several 
millions  of  dollars;  and  indirectly  much  more.  This  amount  of 
money,  while  very  large,  is  far  less  important  in  the  eyes  of 
the  Board  than  the  public  interests  involved. 

The  Board  have  resolved  that  their  award  shall  take  effect  on 
the  first  of  May,  1912.  By  virtue  of  the  agreement  under  which 
the  parties  accepted  arbitration,  the  award  will  continue  for  one 
year  from  that  date,  subject  thereafter  to  thirty  days'  notice  of 
discontinuance  by  either  party.  If  the  work  of  the  Board  leads 
merely  to  a  truce  for  a  year,  its  members  will  feel  that  they  have 
accomplished  comparatively  little;  if,  on  the  other  hand,  their 
work  points  the  way  to  a  permanent  solution  of  controversies 
between  capital  and  labor  engaged  in  the  operation  of  our  public 
utilities,  they  will  feel  that  their  efforts  have  been  abundantly 
repaid. 


V 


-f 


t^ 


■J 


\ 


I 


RAILWAY  ENGINEERS  ARBITRATION 


THE  ERDMAN  AND  CANADIAN  INDUSTRIAL  DISPUTES  ACT^ 


99 


Already  there  is  a  growing  realization  that  labor  difficulties 
upon  railroads  should  not  be  settled  by  war.  The  first  great  step 
toward  the  settlement  of  railway  disputes  in  some  other  way  than 
by  strikes  was  made  when  the  Erdman  Act,  already  referred  to,  was 
passed  in  June,  1898,  having  been  actively  supported  by  the  rail- 
way brotherhoods.  Under  the  provisions  of  this  act,  as  amended, 
when  there  is  a  dispute  between  the  employes  and  the  railway 
companies  which  is  likely  to  lead  to  a  strike  or  which  has  already 
led  to  a  strike,  upon  the  application  of  either  party  it  becomes  the 
duty  of  the  Presiding  Judge  of  the  United  States  Commerce  Court 
and  the  Commissioner  of  Labor  to  put  themselves  in  communi- 
cation with  the  contending  parties  and  use  their  best  efforts 
through  mediation  and  conciliation  amicably  to  settle  the  con- 
troversy. If  efforts  at  mediation  are  unsuccessful,  they  shall 
at  once  endeavor  to  bring  about  an  arbitration  of  the  controversy, 
in  accordance  with  the  provisions  of  the  act.  If  this  be  agreed  to, 
the  arbitrators  shall  be  three  in  number,  one  to  be  named  by  each 
of  the  parties  concerned  and  the  third  by  the  other  two  within 
five  days.  When  they  are  unable  to  agree  upon  a  third  arbitrator 
within  this  time,  he  is  designated  by  the  before-named  officers 
of  the  government.  Arbitration  proceedings  are  to  begin  within 
ten  days  of  the  time  of  the  completion  of  the  board  and  their 
findings  must  be  made  within  thirty  days  from  the  appointment 
of  the  third  arbitrator.  Pending  the  arbitration  the  status  quo 
is  maintained.  No  employe  shall  quit  service  within  three  months 
because  of  dissatisfaction  with  the  award,  nor  shall  an  employer 
discharge  an  employe  for  the  same  reason  during  a  like  period. 
An  award  continues  in  force  for  one  year  after  the  same  has  gone 
into  operation,  and  no  new  arbitration  upon  the  same  subject 

*The  facts  concerning  the  Erdman  Act  and  the  Canadian  Industrial  Dis- 
putes Act,  contained  herein,  are  derived  mainly  from  an  article  by  Charles 
P.  Neill,  on  Mediation  and  Arbitration  of  Railway  Labor  Disputes,  in 
Bulletin  No.  98  of  the  United  States  Bureau  of  Labor,  Washington,  1912, 
pages  1-81. 


J 


r.-'Y- 


.AiwtaMaiaaad«BiM«dH 


100 


RAILWAY  ENGINEERS  ARBITRATION 


can  take  place  within  that  year.  The  only  escape  from  accepting 
the  award  of  the  arbitrators  is  an  appeal  to  the  courts,  which 
appeal  must  be  made  upon  matters  of  law  within  ten  days  from 
the  time  the  award  is  made. 

That  the  Erdman  Act  marks  a  great  advance  in  the  settlement 
of  railroad  labor  disputes  is  shown  by  the  increased  frequency 
with  which  the  Act  has  been  invoked.  Within  a  year  after  the 
passage  of  the  Act  a  fruitless  attempt  was  made  to  utilize  its  pro- 
visions, but  nearly  eight  years  elapsed  before  another  case  occurred. 
In  contrast  with  this,  during  the  past  five  years  the  act  has  been 
invoked  in  forty-six  cases,  of  which  only  eleven  were  arbitrations. 
Thus  the  method  of  mediation  has  been  much  more  frequently  used. 

Since  the  law  was  passed  there  has  been  no  case  of  a  great  rail- 
road strike;  and  although  the  merits  of  the  Erdman  Act  are  great 
indeed,  certain  defects  in  it  have  become  apparent. 

In  the  cases  of  mediation  there  is  no  attempt  on  the  part  of 
the  mediators  to  make  a  judicial  decision  wholly  upon  the  basis 
of  equity  and  justice.  The  primary  purpose  is  to  bring  the  parties 
together  and  avert  a  strike.  This  is  accomplished  by  getting  the 
parties  sufficiently  near  together  that  suggestions  may  be  made 
to  which  both  agree.  While  whenever  mediation  is  successful  a 
strike  is  averted,  the  adjustments  cannot  always  be  regarded 
as  based  solely  upon  the  merits  of  the  case.  Where  the  case 
is  one  of  arbitration  under  the  Erdman  Act  the  results  in 
the  above  respects  are  usually  very  similar  to  those  of  media- 
tion. The  arbitrators  are  three  in  number.  Each  side  is  repre- 
sented by  one  arbitrator.  It  rests  therefore  upon  the  third  arbi- 
trator to  bring  the  other  two  arbitrators  as  nearly  as  possible 
together,  and  if  he  cannot  do  so  he  must  decide  between  them. 
This  is  accomplished  by  spfitting  differences,  and  the  case  may 
be  adjusted  without  adequate  investigation  of  the  facts  involved, 
in  consequence  of  which  the  award  may  not  rest  upon  a  basis  of 
equity. 

This  method  of  splitting  differences  is  very  unsatisfactory,  but 


-.A 
f 


< 


A 


-I 


I 


fv 


^ 


i 


i 


f   * 


RAILWAY  ENGINEERS  ARBITRATION 


101 


it  is  an  inevitable  result  of  mediation  or  arbitration  under  the 
Erdman  Act.  Feefing  in  advance  that  a  mediation  or  arbitration 
will  result  in  giving  only  a  part  of  what  they  ask,  the  men  make 
maximum  demands  regarding  compensation,  rules  of  service,  etc., 
with  the  expectation  that  these  demands  will  not  be  fully  awarded. 
Upon  the  other  hand,  the  railroad  officers,  appreciating  the  tend- 
ency of  mediators  and  arbitrators  to  spfit  differences,  make  only 
minimum  concessions  or  none  at  all. 

By  the  above  statements  it  is  not  meant  to  assert  that  the  awards 
that  have  been  made  under  the  Erdman  Act  have  not  been  reason- 
ably fair,  but  that  in  regard  to  this  matter  the  Board  do  not  have, 
nor  is  it  possible  for  them  to  obtain,  adequate  knowledge  upon 
which  to  formulate  a  judgment.  Cases  before  the  Interstate 
Commerce  Commission,  no  more  complicated  than  those  which 
have  come  before  the  mediators  or  arbitrators  under  the  Erdman 
Act,  have  required  a  year  or  more  before  a  decision  was  made; 
while  the  Erdman  arbitrators  are  compelled  to  make  a  finding  in 
thirty  days;  and  this  notwithstanding  the  fact  that  the  Interstate 
Commerce  Commissioners  have  a  large  expert  staff,  including  a 
number  of  examiners  who  act  for  them  in  taking  evidence. 

The  Canadian  Industrial  Disputes  Act,  passed  in  1907,  ia 
broader  than  the  Erdman  Act  in  that  it  provides  for  the  settlement 
of  disputes  affecting  not  only  railroads,  but  industries  in  general. 
This  act  is  a  distinct  advance  over  the  Erdman  Act  in  that  no 
strike  or  lockout  can  be  made  by  a  party  to  a  controversy  until 
the  difficulties  have  been  investigated  and  recommendations  made. 
For  each  case  of  arbitration  a  separate  board  is  appointed.  Of 
these,  there  had  been  109  to  the  end  of  1911.  During  the  five 
years  of  the  existence  of  the  law,  from  1907  to  1911  inclusive, 
there  have  been  only  twelve  industrial  disputes  in  which  strikes 
have  not  been  averted  or  ended;  and  this  for  all  of  Canada  for 
all  industries.  In  a  given  case  the  board  consists  of  three  members 
appointed  by  the  Minister  of  Labor,  one  from  each  of  the  parties 
to  the  controversy  and  the  third  upon  the  recommendation  of 


i    r 


102 


RAILWAY   ENGINEERS   ARBITRATION 


the  two  members;  or  if  they  fail  to  agree  upon  a  recommendation 
within  five  days,  the  Minister  is  free  to  appoint  the  third  member, 
who  shall  be  the  chairman  of  the  board.  Boards  are  appointed 
upon  the  application  of  either  side  when  a  lockout  or  strike  is 
likely  to  be  declared.  Thus  the  Canadian  Industrial  Disputes 
Act  has  several  features  which  are  like  those  of  the  Erdman  Act. 
Some  of  its  defects  are  also  identical  with  those  of  the  Erdman  Act. 
These  are  the  constitution  of  the  board  of  three  members,  only 
one  of  whom  is  in  a  non-partisan  position,  and  the  creation  of  a 
separate  board  for  each  controversy. 

It  was  an  appreciation  of  these  defects  of  the  Erdman  Act  that 
led  to  the  method  adopted  in  the  appointment  of  this  board  of 
arbitration.  The  questions  involved  were  so  many  and  so  impor- 
tant that  it  was  wholly  impossible  for  any  board  to  make  an  adjudi- 
cation of  them  in  thirty  days.  Moreover,  the  responsibility  which 
ultimately  would  have  rested  upon  a  third  member  of  an  Erdman 
arbitration  board  was  too  great  to  impose  upon  any  one  man. 
These  difficulties  were  avoided  by  an  agreement  of  the  contending 
parties  for  arbitration  by  a  board  of  seven  members,  outside  of 
the  Erdman  Act,  two  of  whom  were  to  represent  the  railroads 
and  the  employes  respectively.  This  left  five  who  were  in  no 
sense  representatives  of  either  side.  Also  there  was  no  limit 
placed  upon  the  time  which  the  board  might  take  for  its  work. 
Thus  the  responsibility  of  making  the  award  on  questions  where 
all  could  not  be  brought  into  agreement  was  shared  by  five  men. 
A  large  amount  of  time  was  taken  for  hearings,  investigations, 
and  findings.  At  the  outset  the  Board  had  no  scientific  machinery. 
This  defect  it  remedied  as  best  it  could  by  the  immediate  appoint- 
ment of  a  secretary  and  statisticians.  The  Board  is  composed 
of  men  who  have  other  important  duties,  and  therefore  have 
been  able  to  give  only  a  part  of  their  time  to  the  work  of  arbitration. 
Finally,  since  the  award  is  to  be  effective  only  for  one  year,  it 
was  felt  that  all  possible  expedition  should  be  used  even  if  the 
awards  were  less  satisfactory  than  they  might  have  been,  had  the 


I 


f 


RAILWAY  ENGINEERS  ARBITRATION 


103 


Board  been  composed  of  men  giving  their  entire  time  to  this  work, 
with  the  assistance  of  a  permanent  expert  staff. 

In  summary,  regarding  the  Erdman  Act,  the  following  may 

be  said. 

The  clause  of  the  Act  which  provides  that  employes  shall  not 
withdraw  or  be  dismissed  within  three  months  on  account  of  dis- 
satisfaction  with  an  award  is  admirable,  giving  reasonable  free- 
dom to  both  sides,  yet  preventing  concerted  action  which  would 
nullify  the  award. 

The  provision  of  the  Act  which  requires  an  award  to  be  made 
within  thirty  days  from  the  time  that  the  third  arbitrator  is 
appointed  makes  it  impossible  for  any  adequate  investigation 
to  be  made  regarding  all  the  facts  in  any  complicated  case,  such 
as  that  before  this  Board  for  arbitration. 

The  danger  of  a  strike  in  the  case  of  the  public  utilities  has 
been  greatly  lessened  by  the  Erdman  Act,  but  has  not  ceased  to 
exist.  The  operation  of  the  Act  is  to  settle  a  dispute  rather  than 
to  adjudicate  a  controversy. 

But  the  most  fundamental  defect  of  the  Erdman  Act  is  that 
the  interests  of  the  public  are  not  guarded  by  it.  In  the  Eastern 
and  Western  railway  cases*  the  claims  for  an  advance  of  freight 
tariffs  were  not  only  presented  by  the  railroads  but  supported 
by  the  employes.  Manifestly  it  is  advantageous  to  both  employ- 
ers and  employes  to  have  the  railroads  get  a  sufficient  income  so 
that  they  will  be  able  to  meet  the  requests  of  the  employes  for 
increased  compensation.  For  the  public  utilities,  however,  there 
are  not  only  two  parties  to  the  controversy — the  railroads  and 
the  employes, — ^but  a  third,  the  public.  As  we  have  already  men- 
tioned, the  railroads,  one  of  the  parties  to  the  controversy,  are 
subject  to  national  and  state  commissions,  which  commissions 
are  entrusted  with  the  special  duty  of  protecting  the  public  inter- 
ests.   Advances  in  rates  cannot  be  made  without  the  consent 

♦  Interstate  Commerce  Commissions  Opinion,  1508  and  1509. 


104 


RAILWAY  ENGINEERS  ARBITRATION 


of  the  proper  commissions.  The  railroads  are  not  only  subject 
to  the  commissions  in  rates,  but  are  subject  to  them  in  regard 
to  maintaining  adequate  service.  The  employes  of  the  railroads  are 
not  subject  to  control  through  commissions;  although  in  common 
with  all  organizations  they  are  influenced  by  public  opinion. 


9 

I 


WAGE  COMMISSIONS  THE  REMEDY 

The  above-mentioned  disparity  of  status  suggests  the  creation  of 
national  and  state  wage  commissions  or  labor  commissions,  which 
should  exercise  functions  regarding  labor,  engaged  at  work  in 
public  utilities,  analogous  to  those  now  exercised  with  regard  to 
capital  by  the  public  service  commissions  already  in  existence. 
If  wage  commissions  were  established,  doubtless  there  would  have 
to  be  some  degree  of  cooperation  between  the  two  kinds  of 
commissions.  Much  of  the  statistical  information  useful  to  the 
public  service  commissions  would  be  valuable  to  the  suggested 
wage  or  labor  commissions.  Many  investigations  might  be  car- 
ried on  jointly  by  both.  But  some  of  the  questions  to  be  dealt  with 
are  so  different  that  it  would  probably  be  better  to  have  separate 
wage  conamissions  or  labor  commissions,  than  to  impose  upon 
existing  public  service  commissions,  already  over-burdened  with 
important  duties,  the  additional  heavy  task  of  adjusting  labor 
controversies  and  determining  what  constitutes  a  fair  wage  for 
each  class  of  railway  employes. 

If  such  commissions  as  are  suggested  should  be  created,  they 
must  be  provided  with  expert  and  statistical  aid  to  enable  them 
to  undertake  elaborate  investigat'ons  of  the  facts  bearing  upon 
the  economic  condition  of  railway  employes.  When  such  com- 
missions have  been  in  existence  for  several  years,  they  will  have 
in  their  possession  the  necessary  facts  upon  which  to  make  awards 
in  individual  cases;  or,  at  all  events,  they  will  have  the  machinery 
and  equipment  necessary  for  gathering  the  facts  promptly  and 
interpreting  them  accurately.     There  is  no  reason  why  such  a 


lasai 


1^1 


RAILWAY  ENGINEERS  ARBITRATION 


105 


commission  could  not  proceed  in  the  case  of  a  labor  difference  with 
the  same  promptness  that  existing  commissions  exercise  in  the 
matter  of  railway  rates. 

If  the  suggestion  for  wage  commissions  be  adopted,  many  excel- 
lent features  and  provisions  of  the  Erdman  Act,  the  Canadian 
Industrial  Disputes  Act,  and  acts  for  conciliation  and  arbitration 
in  other  countries,  might  be  embodied  in  the  law  creating  them. 
The  discussion  of  the  details  of  such  a  law  would  not  be  in  place 
here.  But  it  seems  to  the  Board  that  the  proposal  made  would 
meet  the  fundamental  defects  which  have  been  noted  in  connection 
with  the  Erdman  Act. 

Instead  of  having  a  board  for  each  case,  whose  members  have 
other  duties  and  wholly  inadequate  time  in  which  to  perform  the 
work,  there  would  be  a  continuous  board,  the  members  of  which 
give  their  entire  time  to  the  adjustment  of  wages.  This  board 
would  have  a  corps  of  experts  and  statisticians;  it  would  be  allowed 
sufficient  time  to  investigate  a  case  fully.  Thus  an  award  would 
be  made  upon  the  basis  of  merit  instead  of  the  basis  of  securing 
a  settlement.  If  desirable,  that  feature  of  the  Erdman  Act  and 
Canadian  Industrial  Disputes  Act  might  be  added,  which  provides 
for  one  representative  from  each  party  to  the  controversy.  If  this 
were  done,  and  the  board  consisted  of  five  or  more  members,  it 
would  have  a  permanent  majority  and  a  shifting  minority.  It 
can  be  urged  in  favor  of  this  feature  that  each  representative 
would  intimately  know  the  facts  regarding  his  side  of  the  case 
and  the  point  of  view  of  those  represented.  A  board  thus  con- 
stituted would  have  a  permanent  controlling  center  interested  ia 
securing  equity,  which  might  be  assisted  in  its  work  by  repre- 
sentatives of  each  of  the  parties  to  the  controversy. 

Above  all,  the  wage  commissions  proposed  would  represent  the 
public.  They  would  work  in  cooperation  with  the  Interstate 
Commerce  Commission  and  thus  secure  to  railway  employes  just 
wages;  and  this  without  regard  to  whether  the  employes  are  fully 
organized.     Under  the  existing  situation,  well  organized  railway 


i 


106 


RAILWAY   ENGINEERS  ARBITRATION 


labor,  illustrated  by  engineers,  firemen,  conductors,  trainmen,  etc. 
receive  consideration  from  railroads  not  accorded  to  the  classes 
of  labor  that  are  not  so  well  organized. 

It  does  not  follow  from  the  above  that  advances  in  pay  to 
organized  labor  have  been  too  frequent  or  too  large,  but  merely 
that  the  question  of  an  advance  for  a  given  class  of  labor  engaged 
in  work  upon  the  public  utilities  should  not  depend  upon  organi- 
zation, but  upon  justice.  Especially  for  the  public  utilities  is 
it  important  that  labor  should  have  a  just  wage,  and  if  the  exist- 
ing wages  are  not  adequate  they  should  be  increased.  If  a  just 
increase  in  wages  places  the  public  utilities  in  a  position  that  does 
not  enable  them  to  secure  a  fair  return  upon  capital  invested  and 
maintain  a  proper  reserve  they  should  be  allowed  to  increase  their 
rates  until  they  are  in  that  position.  In  short,  the  public  utilities 
should  not  impose  an  undue  burden  upon  the  public  by  paying 
higher  wages  than  are  reasonable,  nor  should  the  public  receive 
services  from  the  railroads  at  a  rate  so  low  that  labor  does  not 
receive  fair  compensation  and  capital  its  fair  return.  How  impor- 
tant this  statement  is  will  be  understood  when  it  is  appreciated 
that,  of  the  gross  earnings  of  the  railroads  of  the  United  States 
as  a  whole,  over  42  per  cent  goes  to  labor  (excluding  officials)  and 
on  the  fifty-two  railroads  involved  in  this  controversy,  over  45 
per  cent. 

If  the  arguments  above  presented  are  sound,  there  seems  to 
be  no  way  to  obtain  justice  for  the  three  parties  concerned, — the 
railway  companies,  the  railway  employes,  and  the  public, — except 
through  a  permanent  board  which  shall  have  continually  before 
them  the  problem  of  the  adjustment  of  wages. 

LIMITATION  OF  RIGHT  OF  FREE  CONTRACT 

It  is  believed  that  if  the  plan  of  wage  commissions  were  adopted, 
it  is  probable  that  railway  employes  would  not  have  a  just  ground 
for  a  strike ;  and  this  fact  combined  with  the  power  of  the  law  and 


< 


i 


RAILWAY  ENGINEERS   ARBITRATION 


107 


public  opinion  would  render  a  strike  extremely  unlikely  in  the 
future.  If,  notwithstanding  the  existence  of  a  wage  commission, 
the  men  engaged  in  train  service  struck,  the  question  would  arise 
regarding  the  legal  authority  of  the  government  to  compel  employes 
to  remain  at  work.  Is  it  unreasonable  to  ask  that  men  in  the 
service  of  public  utilities  shall  partially  surrender  their  liberty  in 
the  matter  of  quitting  employment,  so  that  the  nation  as  a  whole 
may  not  suffer  disproportionally? 

While  the  courts  have  uniformly  recognized  the  principle  of 
free  contract  and  have  always  refused  to  compel  continuance  of 
employment  on  the  demand  of  either  party,  several  states  have 
enacted  laws  prohibiting  engineers  from  leaving  their  trains  at 
any  other  place  than  at  the  end  of  their  regular  runs.* 

The  courts  have  also  discussed  the  position  of  employes  and 
carriers  in  some  of  the  so-called  boycott  cases,  and  it  has  been 
held  that  the  cars  must  continue  to  move  and  traffic  must  con- 
tinue to  flow.  Any  interference  with  traffic,  except  that  which 
is  the  incidental  result  of  the  exercise  of  a  lawful  right,  as  the  ceas- 
ing of  employment  for  the  betterment  of  one's  own  condition,  is 
unlawful;  and  therefore  sympathetic  strikes  and  boycotts  in  the 
case  of  railroad  carriers  have  been  condemned.  This,  however, 
does  not  reach  the  present  difficulty,  where  the  pubhc  is  so  depend- 
ent on  the  continuous  service  of  a  certain  class  of  railroad  em- 
ployes that  the  concerted  abandonment  of  their  work  would  bring 
about  a  paralysis  of  all  industrial  life. 

While  it  is  clear  from  the  pubhc  point  of  view  that  a  concerted 
strike  of  railway  employes  for  a  great  region  would  be  as  intoler- 
able as  a  strike  of  the  postal  clerks;  on  the  other  hand,  the  position  of 
the  employes  is  a  very  natural  one.  They  feel  under  existing 
conditions  that  the  power  to  strike  is  their  only  weapon  of  defense 
against  employers  and  the  only  means  by  which  they  can  enforce 
a  betterment  of  their  conditions  of  service.     They  realize  too, 

*  Report  of  the  Industrial  Commission,  vol.  5,  pp.  132-135. 


"-'ir-x*j,  '-.--a. 


il^-^  -  ''  r'li    y,i 


ssmumti 


<    .. 


J 
\ 


108 


RAILWAY  ENGINEERS  ARBITRATION 


RAILWAY  ENGINEERS  ARBITRATION 


109 


that  the  principle  of  concerted  action,  for  all  the  railroads  in  a 
great  section  of  the  country,  gives  them  a  most  effective  weapon^ 
and  they  are  naturally  loath  to  relinquish  or  impair  it. 

While  this  is  the  situation  under  the  present  conditions,  and 
the  railway  employes  feel  that  they  cannot  surrender  their  right 
to  strike;  the  necessity  would  no  longer  exist  for  the  exercise  of 
this  power,  if  there  were  a  wage  commission  which  would  secure 
them  just  wages. 

Finally,  it  is  the  belief  of  the  Board  that  in  the  last  analysis 
the  only  solution, — unless  we  are  to  rely  solely  upon  the  restraining 
power  of  public  opinion, — is  to  qualify  the  principle  of  free  con- 
tract in  the  railroad  service.  A  strike  in  the  army  or  navy  is 
mutiny  and  universally  punished  as  such.  The  same  principle 
is  applied  to  seamen  because  of  the  public  necessity  involved.  A 
strike  among  postal  clerks,  as  among  the  teachers  of  our  public 
schools,  would  be  unthinkable.  In  all  these  cases,  the  employ- 
ment, to  borrow  a  legal  phrase,  is  affected  with  a  public  use ;  and 
this  of  necessity  qualifies  the  right  of  free  concerted  action  which 
exists  in  private  employments. 

However,  if  the  principle  be  accepted  that  there  are  certain 
classes  of  service  thus  affected  with  a  pubhc  interest  and  men 
who  enter  them  are  not  free  concertedly  to  quit  the  service,  then 
these  men  must  be  guarded  in  the  matter  of  wages  and  conditions 
by  public  protection;  and  this  it  is  believed  can  best  be  done 
through  an  interstate  wage  commission. 

CONCLUSION 

It  is  well  understood  by  the  Board  that  the  problem  for  which 
the  above  plan  is  a  suggested  solution  is  a  complex  and  difficult 
one.  The  suggestion,  however,  grows  out  of  a  profound  convic- 
tion that  the  food  and  clothing  of  our  people,  the  industries  and 
the  general  welfare  of  the  nation,  cannot  be  permitted  to  depend 
upon  the  policies  and  the  dictates  of  any  particular  group  of  men, 
whether  employers  or  employes,  nor  upon  the  determination  of 


/ 


< 


a  group  of  employers  and  employes  combined.  The  pubhc  utili- 
ties of  the  nation  are  of  such  fundamental  importance  to  the 
whole  people  that  their  operation  must  not  be  interrupted,  and 
means  must  be  worked  out  which  will  guarantee  this  result. 

The  above  report  is  unanimously  agreed  to  by  the  five  members 
of  the  board  appointed  by  the  Chief  Justice  of  the  United  States, 
the  Presiding  Judge  of  the  Commerce  Court  and  the  Commissioner 
of  Labor;  it  is  signed  by  Mr.  Willard,  with  an  explanatory  state- 
ment; Mr.  Morrissey  files  a  dissenting  opinion. 


A 


I 


V 


(Signed) 

Charles  R.  Van  Hise, 

Chairman, 

(Signed) 

Oscar  S.  Straus, 

(Signed) 

F.   N.   JUDSON, 

(Signed) 

Otto  IVI.  Eidlitz, 

(Signed) 

Albert  Shaw, 

(Signed) 

D.  Willard. 

< 


^ 


^ 


EXPLANATORY  STATEMENT  BY  MR.  WILLARD 

Inasmuch  as  the  findings  and  conclusions  of  the  Board  are  not 
unanimous,  I  think  it  is  proper  that  I  should  briefly  state  my  posi- 
tion as  representing  the  railroads  in  this  matter. 

When  requested  by  the  railroads  to  serve  as  their  representative, 
it  was  imderstood  that  efforts  would  be  made  to  secure  as  the 
actual  arbitrators  in  this  case,  five  men  of  the  highest  character 
and  ability.  It  was  recognized  by  all  that  the  two  members 
named  by  the  parties  in  interest,  while  given  under  the  terms  of 
the  agreement,  equal  standing  with  the  other  members  of  the 
Board,  would  also  necessarily  occupy  the  position  of  advocates 
representing  the  parties  by  whom  they  were  selected. 

I  have  felt  from  the  first  that  it  was  desirable  to  secure,  if  possi- 
ble, a  unanimous  report,  and  in  view  of  the  fact  that  the  five  mem- 
bers appointed  by  the  Chief  Justice  and  his  associates — as  pro- 
vided by  the  agreement  of  April  30 — have,  after  a  most  searching 
investigation,  reached  a  unanimous  conclusion,  it  seems  to  me  that 
I  ought  also  to  sign  the  report  in  order  that  I  may,  by  so  doing, 
plainly  signify  its  acceptance  by  the  parties  I  was  chosen  to  repre- 
sent. My  acceptance  of  the  award  as  a  whole  does  not  signify 
my  approval  of  all  the  findings  in  detail.  It  is  intended,  however, 
to  indicate  clearly  that  although  the  award  is  not  such  as  the 
railroads  had  hoped  for,  nor  is  it  such  as  they  felt  would  be  justi- 
fied by  a  full  consideration  of  all  the  facts,  yet,  having  decided 
to  submit  their  case  to  arbitration,  and  having  been  given  ample 
opportunity  to  present  the  facts  and  arguments  in  support  of 
their  position,  they  now  accept  without  question  the  conclusion 
which  was  reached  by  the  Board  appointed  to  pass  upon  the  mat- 
ters at  issue. 

(Signed)    D.  Willard. 


110 


t 


(' 


\> 


t 


MINORITY  REPORT  OF  P.  H.  MORRISSEY,  REPRESENT- 
ING  THE  BROTHERHOOD  OF  LOCOMOTIVE  ENGI- 
NEERS 

In  expressing  dissent  from  the  award  of  the  Board,  I  do  not 
underestimate  the  importance  to  the  engineers  of  the  effects  of 
such  increases  in  wage  rates  and  the  establishing  of  such  uni- 
form rules  of  service  as  the  Board  have  granted.  There  has 
been  a  gain  in  essentials  and  a  step  forward  has  been  taken  in 
the  standardization  of  engineers'  rates  and  of  conditions  for  the 
Eastern  district.  At  the  same  time  I  cannot,  from  the  labor 
point  of  view,  permit  the  majority  report,  its  reasoning  and  its 
recommendations  in  certain  vital  particulars  to  go  unquestioned. 

The  award  of  the  Board  does  not  settle,  it  merely  postpones 
the  settlement,  of  principles  for  which  the  engineers  are  contend- 
ing. Any  award  based  upon  wage  statistics  such  as  the  Board 
have  used  in  arriving  at  their  decision,  and  upon  the  comparisons 
they  have  employed  in  their  argument  to  substantiate  the  award, 
cannot  be  permanent  because  the  very  foundation  itself  is  so 
insecure.  There  is  no  question,  however,  that  the  engineers  will 
faithfully  abide  by  the  terms  of  the  award  during  the  period  for 
which  it  is  operative — this  they  agreed  to  do  before  the  board 
of  arbitration  was  selected.  But  when  they  consented  to  submit 
their  requests  to  such  a  board  it  was  in  the  firm  belief  that  an 
award  would  be  made  which  would  recognize  that  changing  con- 
ditions in  train  operation  must  be  met  by  new  rules  and  regula- 
tions of  employment.  This,  the  engineers  will  feel,  has  not  been 
done. 

There  is  no  such  thing  as  absolute  justice  in  the  arbitration 
of  wage  disputes.  Those  who  agree  to  the  principle  cannot  in 
the  nature  of  things  hope  always  to  be  fully  sustained.  Arbi- 
tration points  to  compromise  of  extreme  views  and  this  is  par- 
Ill 


< 


i 


112 


RAILWAY  ENGINEERS  ARBITRATION 


ticularly  true  when  human  welfare  or  social  justice  is  a  factor. 
The  principle  of  arbitration  which  many  thoughtful  and  well- 
meaning  people  are  earnestly  striving  to  establish  as  a  part  of 
our  industrial  system  will  not  be  advanced  by  the  Board's  award. 
On  the  contrary,  the  effect  very  likely  will  be  to  retard  the  prog- 
ress of  arbitration  as  a  means  of  preventing  strikes  on  railways. 
In  the  majority  report  of  the  Board  is  presented  a  brief  history 
of  the  present  arbitration  proceedings,  an  analysis  of  the  diffi- 
culties of  the  problem  before  the  Board  for  settlement,  and  a 
discussion  of  standardization.  Under  the  heading,  *'The  Problem 
of  Compensation  to  Capital,"  is  discussed  the  intercorporate 
relations  of  the  fifty-two  roads,  their  ability  to  pay  increased 
compensation,  appropriations  for  additions  and  betterments,  and 
the  question  of  surplus,  the  Board  concluding  that,  "In  making 
our  award  we  therefore  eliminate  the  claim  of  the  railroads  that 
they  are  unable  to  pay  an  increased  compensation."  Then  the 
majority  report  says: 

What,  then,  is  the  basis  upon  which  a  judgment  may  be  passed 
as  to  whether  the  existing  wage  scale  of  the  engineers  in  the 
Eastern  district  is  fair  and  reasonable?  It  seems  to  the  Board 
that  the  only  practicable  basis  is  to  compare  the  rates  and 
earnings  of  engineers  in  the  Eastern  district  with  those  of 
engineers  in  the  Western  and  Southern  districts  and  with  those 
of  other  classes  of  railway  employes.  In  doing  the  latter  it  is  not 
meant  to  assume  that  the  compensation  of  the  engineers  should 
not  be  higher  than  that  of  other  skilled  labor  in  railroad  service 
but  in  order  to  ascertain  the  difference  which  has  actually  existed 
between  the  engineers  and  other  classes  of  railroad  employes  in 
the  same  and  in  different  districts. 

In  answer  to  this  question  the  Board  make  use  of  only  the 
average  daily  compensation  statistics  of  the  Interstate  Commerce 
Commission.  The  report,  in  considerable  detail,  gives  warning  that 
these  statistics  are  not  to  be  relied  upon  for  this  purpose,  and 
then,  in  an  effort  to  give  reasons  for  or  to  substantiate  the  award, 
it  proceeds  to  use  them  in  exactly  the  way  it  points  out  should 
not  be  done.     The  engineers  in  the  Eastern  district  have  no 


i 


J 


f 


} 


'J    > 


RAILWAY  ENGINEERS  ARBITRATION 


113 


objection  to  a  fair  comparison  of  their  earnings  with  those  of 
other  train  employes  in  the  same  or  different  districts,  nor  to  a 
proper  comparison  of  their  earnings  with  those  of  engineers  in  the 
Southern  and  Western  districts.  Indeed,  it  is  upon  these  very 
grounds  that  the  engineers  of  the  Eastern  district  have  asked  for 
increased  wages.  Their  earnings  have  not  kept  pace  with  those 
of  other  train  employes  in  the  Eastern  district,  nor  with  those 
of  engineers  in  either  the  Southern  or  Western  districts.  Such 
comparisons,  therefore,  would  be  welcomed  by  the  engineers  in 
the  Eastern  district  because  they  are  convinced  that  if  properly 
made  these  comparisons  would  sustain  their  contention  for  an 
increase  in  wages. 

But,  in  view  of  the  clear  statement  of  the  Interstate  Commerce 
Commission  itself  that  their  average  daily  compensation  statistics 
are  not  altogether  satisfactory;  in  the  face  of  my  own  contention 
before  the  Board  against  a  consideration  of  these  figures;  even 
against  the  unanimous  recommendation  of  the  Board's  own  sta- 
tisticians warning  us  of  the  danger  of  any  such  use  of  these  sta- 
tistics; in  view  of  all  this,  and  with  full  knowledge  of  their  unre- 
liability, these  Interstate  Commerce  Commission  average  daily 
compensation  figures  have  been  used  by  the  Board  in  their  report 
as  the  basis  for  their  award. 

In  the  first  place,  these  daily  compensation  figures  of  the  Com- 
mission purport  to  be  only  averages.  They  are  averages,  too, 
that  do  not  reflect  the  very  important  element  of  overtime.  This 
overtime,  it  is  important  to  note,  may  in  cases  be  paid  for  at  a 
higher  rate  than  are  the  normal  days  worked,  for  which  latter 
the  average  daily  compensation  figures  of  the  Commission  are 
taken  to  represent.  Again,  these  compensation  statistics  of  the 
Commission  are  prepared  from  reports  made  by  the  several  indi- 
vidual roads,  among  which  there  exist  varying  methods  of  deter- 
mining what  is  a  day's  work.  Neither  do  they  segregate  engineers 
in  the  different  branches  of  service,  such  as  passenger,  freight, 
switching,  and  so  on.     The  total  amount  of  compensation  paid 


114 


RAILWAY  ENGINEERS  ARBITRATION 


by  a  road  to  a  given  class  of  employes — say,  engineers — is  divided 
by  the  total  number  of  days  worked  by  the  men  in  that  class — 
in  this  case,  the  engineers — to  determine  the  average  daily  com- 
pensation. Neither  the  maximum  nor  the  minimum  compensa- 
tion is  shown.  All  compensation  paid  the  engineers,  whether 
for  mileage,  overtime,  deadheading,  switching  and  other  like 
allowances  within  the  individual  schedules,  is  included  in  the 
total  amount.  These  different  elements  are  so  varying,  even 
within  the  same  district,  that  no  accurate  idea  of  the  actual 
earnings  of  engineers  can  be  secured  from  such  average  daily 
compensation  figures.  Especially  is  it  true  that  because  of  the 
widely  varying  conditions  in  different  districts,  no  adequate  or 
satisfactory  comparisons  can  be  made  as  between  the  compen- 
sation of  any  particular  class  in  one  district  with  the  same  or 
other  classes  in  other  districts.  Most  assuredly  such  compari- 
sons will  not  accurately  reflect  the  relative  value  of  the  working 
agreements  or  wage  schedules  governing  the  compensation  of 
engineers  of  one  district  as  against  another.  Not  only  is  all  this 
true  but  the  figures  of  the  Interstate  Commerce  Commission  as 
regards  compensation  and  upon  which  the  award  of  the  Board 
is  based,  were  compiled  before  the  wage  adjustment  of  1911  was 
made  in  the  Southern  district,  and  therefore  do  not  record  the  very 
important  fact,  known  to  the  Board,  that  the  wages  of  engineers 
in  the  Southern  district  were  still  further  increased  in  1911,  making 
even  more  unreliable  the  statistical  comparisons  which  the  majority 
report  so  laboriously  strives  to  work  out. 

In  brief,  as  representative  of  the  engineers,  I  hold  that  the 
statistical  information  upon  which  the  Board  bases  its  award  is 
insufficient,  unreliable,  inaccurate  and  misleading  in  all  the  ways 
that  the  Board  have  made  use  of  it.  This  information  could 
serve  no  useful  purpose  toward  enabling  the  Board  to  arrive  at 
a  just  conclusion  as  to  the  relation,  over  a  period  of  years,  of 
engineers^  earnings  in  the  Eastern  district  as  compared  with 
those  of  engineers  in  the  Southern  and  in  the  Western  districts, 


-( 


■I 


I* 


RAILWAY  ENGINEERS  ARBITRATION 


115 


and  of  the  relation  of  engineers'  earnings  to  those  of  other  train 
employes  in  the  Eastern  district. 

Such  use  of  these  average  daily  compensation  statistics  as  the 
Board  have  made  as  a  basis  for  determining  earnings  or  wages 
between  employers  and  employes  on  the  railroads,  was  never  even 
contemplated  by  the  Commission.  They  were  intended  merely 
to  reflect  a  general  situation  and  not  particular  conditions  that 
can  be  measured  in  dollars  and  cents  in  a  comparison  of  the 
earnings  of  the  different  classes  of  employes  in  the  several  districts 
or  territories  over  a  period  of  years.  Indeed,  so  unsatisfactory 
are  these  statistics  that  the  Commission  has  taken  steps  to  change 
the  method  of  their  collection  and  compilation. 

Not  only  are  the  comparisons  that  the  majority  report  of  the 
Board  makes  on  the  basis  of  these  average  daily  compensation 
figures  unjustifiable  but  it  is  also  even  worse  to  use  these  figures 
in  a  comparison  of  engineers'  wages  with  those  of  telegraphers, 
station  agents,  carpenters,  and  machinists — employments  so  dis- 
similar and  in  which  the  basal  facts  for  determining  wages  are 
governed  by  entirely  different  elements. 

STANDARDIZATION 

The  engineers  ask  for  certain  uniform  rates  of  pay  and  rules, 
the  application  of  which  to  existing  rates  and  rules  would  work 
varying  increases  in  compensation.  The  rates  requested  are  gen- 
erally somewhat  higher  than  those  in  effect  in  the  Southern  dis- 
trict and  in  that  part  of  the  Western  district  with  which  they 
seek  to  compare.  They  contend  that  in  the  Eastern  district 
the  conductors  and  trainmen  already  receive  a  standard  wage  for 
all  the  roads.  The  rates  and  rules  for  conductors  and  trainmen 
for  both  the  Southern  and  Western  districts  more  nearly  approxi- 
mate uniformity  than  do  the  rates  and  rules  of  the  engineers  in 
any  of  the  three  territories.  There  is  also  a  decided  tendency 
toward  uniformity  in  the  rates  of  conductors  and  trainmen  for 


^  ' 


1l 


\ 


116 


RAILWAY   ENGINEERS   ARBITRATION 


that  part  of  the  Western  district  with  which  comparison  is  made. 
The  majority  report  does  not  sufficiently  take  this  into  con- 
sideration. 

In  my  opinion  all  these  should  have  had  weight  as  precedent 
in  determining  the  question  of  standardization,  for  the  reasons 
used  by  the  roads  against  standardization  for  engineers  apply 
with  equal  force  against  conductors  and  trainmen,  to  which 
classes  the  principle  of  standardization  has  already  been  largely 
conceded.  The  tendency  is  constantly  toward  standardization. 
First,  the  rates  and  rules  are  standardized  for  the  different  divi- 
sions of  the  same  road.  This  once  accomplished  it  is  natural 
for  both  managements  and  employes,  when  adjusting  rates  and 
rules,  to  make  comparisons  with  adjacent  roads.  But  all  stand- 
ardization that  has  been  effected  thus  far  has  recognized  some 
slight  variations  on  account  of  peculiar  or  different  conditions 
on  some  particular  road  or  at  some  point  of  a  road.  There  has 
never  been  a  question  as  between  so-called  mountain  and  plain 
service  in  the  Eastern  district  to  which  the  majority  report 
refers.  Differentials  for  mountain  service  are  confined  wholly  to 
the  far  West,  with  which  section  the  engineers  of  the  Eastern 
district  do  not  undertake  to  compare.  It  does  not  necessarily 
follow  that  a  standard  for  a  class  fails  to  obtain  in  a  given  terri- 
tory because  there  are  minor  local  exceptions  on  some  particular 
road.  It  does  not  require  100  per  cent  of  standardization  to 
establish  the  claim  that  standardization  exists. 

The  statement  in  the  report  that  the  standard  rate  is  a  mini- 
mum rate  is  in  a  general  sense  correct.  But  the  standard  rate 
may  also  be  the  maximum  rate.  A  road  may  have  a  standard 
rate  for  all  of  its  operations  with  the  exception  of  a  single  light 
branch  run,  which  may  be  paid  less  than  the  standard  rate,  but 
that  single  low  rate  is  not  the  minimum  rate  or  the  standard 
rate  for  the  engineers  of  that  road.  The  standardization  which 
has  been  accomplished  and  the  extension  of  which  s  sought  by  the 
engineers  contemplates  different  rates  for  different  classes  of  serv- 


1, 


I 


/ 


I 


I 


y 


> 


t 


> 


■I        > 


RAILWAY  ENGINEERS  ARBITRATION 


117 


ice;  and  in  the  case  of  larger  engines,  different  rates  in  the  same 
class  of  service.  Any  wage  adjustment  that  merely  treats  these 
conditions  by  the  application  of  a  so-called  minimum  rate,  as  in 
the  award  of  the  Board,  falls  far  short  of  settling  the  question 
and  merely  postpones  the  issue  for  future  determination. 

While  recognizing  the  gain  to  the  engineers  from  the  appli- 
cation on  the  various  roads  of  a  minimum  wage  of  $4.25  in  pas- 
senger service  and  $4.75  in  through  freight  service,  at  the  same 
time  the  award  of  the  Board  does  not  settle  the  important  ques- 
tion submitted  by  the  engineers  of  different  rates  of  pay  for  differ- 
ent classes  of  engines,  and  therefore  it  does  not  adequately  treat 
the  situation.  In  its  analysis  the  Board  find  that  both  parties 
to  the  arbitration  agree  that  different  sizes  of  engines  should  have 
different  rates.  Whether  these  rates  be  determined  according  to 
size  of  cylinder,  weight  on  drivers,  draw-bar  pull,  or  any  other 
basis,  is  not  material.  Whatever  basis  might  be  agreed  upon 
must  necessarily  be  arbitrary;  no  one  could  hope  that  it  would 
be  exact.  Such  bases  have  been  established  in  other  arbitrations 
and  in  adjustments  between  the  roads  and  their  employes  where 
the  difficulty  and  complexity  have  been  as  great  as  here  pre- 
sented. There  are  no  scientific  or  other  formulae  to  prove  their 
correctness.  The  rates  decided  upon  by  the  Board  are  them- 
selves arbitrary  and  by  the  same  reasoning  they  employed  these 
rates  could  have  been  greater  or  less. 

ADDITIONS  AND   BETTERMENTS  AND  THE   QUESTION  OF  SURPLUS 

IN  RELATION  TO  WAGES 

Whether  the  roads  concerned  in  this  arbitration  were  justified 
in  appropriating  $30,973,459  out  of  income  for  additions  and 
betterments  and  in  carrying  $32,129,676  to  surplus  for  the  fiscal 
year  1911,  should  not,  it  seems  to  me,  have  more  than  an  aca- 
demic bearing  on  the  questions  before  the  Board.  Both  sums 
could  have  been  distributed  instead  as  dividends  without  doing 
violence  to  the  principle  that  investments  in  railways  are  entitled 


t    > 


118 


RAILWAY  ENGINEERS  ARBITRATION 


1*1 


la 

.1 


to  a  reasonable  return.  It  is  quite  possible  for  the  roads  to  make 
large  appropriations  for  additions  and  betterments  in  any  one 
year,  and  for  the  following  years  to  make  little  or  no  appropri- 
ations for  these  purposes. 

Railway  labor  does  not  begrudge,  on  the  contrary  it  approves 
of  proper  expenditures  out  of  income  for  additions  and  better- 
ments, because  it  knows  that  these  are  necessary  to  keep  pace 
with  the  growing  demands  of  traffic,  and  in  the  end  mean  higher 
pay,  better  conditions  and  greater  safety  for  the  employes.  Be- 
sides, these  are  matters  that  concern  the  stockholders  and  the 
public  after  the  employes'  wages  have  been  earned  and  paid. 
The  distribution  of  net  earnings  after  the  payment  of  proper 
operating  expenses,  taxes  and  interest  charges,  can  be  left  to 
the  owners  of  the  properties,  under  the  watchful  supervision  of 
the  Interstate  Commerce  Commission. 

For  these  and  other  reasons  it  is  not  believed  that  the  Board 
are  prepared  to  say  whether  the  sums  mentioned  for  additions 
and  betterments  and  for  surplus  are  conservative  or  excessive. 
If  these  amounts  are  necessary  and  if  the  solvency  and  efficiency 
of  the  roads  would  be  impaired  by  an  advance  in  engineers'  wages, 
it  would  then  give  just  cause  for  the  Interstate  Commerce  Com- 
mission to  protect  the  roads  by  permitting  a  readjustment  of 
transportation  rates.  The  determination  of  fair  wages  to  the 
employes  is  prior  to  and  not  dependent  upon  varying  theories 
as  to  how  earnings  are  to  be  distributed. 

THE   FRENCH   RAILWAY   STRIKE   AND   ASSUMED    CONDITIONS   IN   THE 
EASTERN   DISTRICT   OF  THE   UNITED   STATES 

The  majority  report  discusses  the  railway  labor  situation  from 
the  public  standpoint  and  suggests  methods  by  which  strikes  in 
the  future  may  be  prevented.  The  consequences  of  a  strike  of 
engineers  in  the  Eastern  District  are  vividly  portrayed— in  fact,  it 
might  be  said  that  the  picture  is  greatly  overdrawn.  The  con- 
ditions which  have  made  necessary  concerted  action  on  the  part 


y 


RAILWAY  ENGINEERS  ARBITRATION 


119 


>, 


( 


> 


-> 


} 


of  the  engineers,  like  that  of  other  classes  of  railway  employes, 
are  not  sufficiently  explained.  It  is  left  to  be  inferred  that  con- 
certed action  is  part  of  a  program  of  the  organizations  to  gain 
power.  Such  inference  does  not  represent  the  situation,  for  the 
policy  of  the  railroads  in  respect  to  labor  matters  has  been  a 
contributing  cause.  The  developing  power  of  the  organizations 
through  concerted  methods  carries  with  it  increasing  responsi- 
bilities which  the  organizations  and  their  leaders  recognize.  They 
well  know  the  value  of  pubUc  approval  of  their  activities  and  are 
equally  conscious  of  its  disapproval.  To  intimate  that  the  trans- 
portation of  the  country  can  be  brought  to  a  standstill  at  the 
whim  or  caprice  of  a  small  group  of  men  is  not  a  fair  statement 
of  the  manner  by  which  the  powers  of  these  organizations  are 
exercised;  on  the  contrary,  their  power  is  wisely  safeguarded  and 
restricted.  The  leaders  simply  reflect  and  carry  out  the  long- 
considered  and  well-determined  decisions  of  the  rank  and  file. 

The  presumption  that  the  balance  of  power  in  these  contro- 
versies now  rests  with  the  railway  labor  organizations  is  suscep- 
tible of  better  proof  than  the  mere  statement  to  that  effect.  We 
have  never  witnessed  the  combined  resources  of  the  railways  of 
a  great  section  of  the  country  in  resistance  to  a  strike  of  a  single 
class  of  their  employes;  we  cannot  even  fairly  estimate  the  reserve 
force  of  a  combination  of  railways  such  as  those  engaged  in  this 
controversy  with  the  engineers. 

The  1910  railway  strike  in  France  is  described  as  paralleling 
a  possible  tie-up  on  the  part  of  the  engineers  in  the  Eastern  dis- 
trict. From  this  is  built  up  an  assumed  condition  that  would 
result  from  a  general  strike  of  engineers  in  the  Eastern  district 
as  justification  of  the  Board's  recommendation  of  compulsory 
arbitration  and  the  limitation  of  the  right  of  contract  of  the 
railway  employes.  The  comparison  fails  to  note  the  difiference 
between  a  general  strike  of  engineers  and  that  of  all  railway 
employes,  which  latter  was  the  case,  or  at  least  was  attempted, 
in  France.    Another  phase  with  which  there  can  be  no  compari- 


f  ' 


> 


120 


RAILWAY   ENGINEERS  ARBITRATION 


RAILWAY   ENGINEERS  ARBITRATION 


121 


son  of  an  assumed  situation  in  this  country  is  that  the  French 
strike  was  a  part  of  the  program  of  European  Syndicalism  which 
has  probably  reached  its  greatest  strength  in  France.  The  gen- 
eral strike  is  no  part  of  the  American  railway  employes'  program. 
Still  another  reason  why  it  cannot  be  compared  to  American 
conditions  is  that  the  immediate  cause  in  the  French  strike  was 
the  refusal  of  the  railway  officials  to  confer  with  the  representa- 
tives of  their  employes  in  order  that  there  might  be  even  a 
discussion  of  the  employes'  demands.  There  is  no  such  condition 
in  America.  In  brief,  the  analogy  which  the  majority  report 
attempts  to  make  would  require  all  the  men  on  all  the  railways 
to  quit  work  at  the  same  time,  a  condition  so  improbable  as  to 
question  the  propriety  of  any  recommendation  based  upon  it. 

There  has  not  been  a  railway  strike  of  any  serious  consequence 
since  the  Erdman  Act  has  been  made  effective.  The  organiza- 
tions have  availed  themselves  of  this  Act  as  often  as  have  the 
companies,  and  there  is  but  one  instance  where  a  strike  occurred 
after  mediation  had  begun,  and  that  strike  resulted  disastrously 
to  the  organization  responsible  for  it.  In  the  controversy  which 
resulted  in  the  present  arbitration  neither  side  showed  a  disposi- 
tion to  take  advantage  of  the  Act.  The  engineers  were  prepared 
to  strike  and  the  railways  were  willing  that  they  should  strike, 
or,  if  they  felt  differently  about  it,  they  at  no  time  made  this 
known.  Their  position  did  not  indicate  any  fear  of  the  power 
of  the  organization  or  any  lack  of  ability  to  handle  a  situation 
which  might  grow  out  of  a  strike.  Fortunately  for  the  public's 
interest,  the  intervention  of  Judge  Knapp  and  Commissioner 
Neill,  although  without  authority  under  the  law,  did  that  which 
neither  the  railways  nor  the  engineers  appeared  disposed  to  do, 
and  thus  averted  a  test  of  strength. 

Right  here  it  might  be  said  that  in  the  light  of  experience  the 
Erdman  Act  is  defective  in  not  authorizing  the  government  offi- 
cials to  invoke,  on  their  own  motion,  the  provisions  of  this  Act. 
The  Act  might  also  be  amended  so  that  the  arbitration  board 


\, 


/ 


> 


> 


> 


> 


might  have  three,  five,  seven,  or  nine  members,  depending  upon 
the  magnitude  and  importance  of  the  issue,  with  the  neutral 
representatives  holding  the  balance  of  power.  My  experience  in 
this  arbitration  convinces  me  that  the  representatives  of  no  class, 
even  that  of  the  public,  should  have  a  majority  of  the  members 
of  the  board. 

WAGE    COMMISSIONS   AND    COMPULSORY   ARBITRATION 

There  could  be  no  serious  objection  on  the  part  of  the  railway 
employes  to  the  creation  of  wage  commissions,  as  suggested  in 
the  majority  report  of  the  Board,  for  the  purpose  of  collecting 
information  and  data  pertinent  to  wage  and  economic  conditions 
throughout  the  country.  Such  information  would  be  useful  in 
determining  a  controversy  such  as  this.  It  has  already  been 
pointed  out  that  the  average  daily  compensation  statistics  re- 
ported by  the  Interstate  Commerce  Commission  are  faulty  and 
that  just  conclusions  cannot  be  reached  in  any  railway  wage  con- 
troversy by  their  use.  Clothed  with  the  authority  of  a  govern- 
ment report,  their  misuse  in  this  arbitration  has  worked  great 
injury  to  the  engineers.  Certainly,  the  Interstate  Commerce 
Commission,  or  the  Bureau  of  Labor  (which  handles  statistics 
of  all  other  labor),  or  a  wage  commission  created  for  this  pur- 
pose, should  take  the  matter  in  hand  and  supply  just  such  infor- 
mation as  has  been  lacking  in  the  present  arbitration. 

But  when  it  is  contemplated  that  such  wage  commissions  would 
have  all  the  powers  of  a  court  in  determining  a  labor  controversy, 
or  at  least  equal  to  the  power  of  the  Interstate  Commerce  Com- 
mission in  the  determination  of  transportation  rates,  with  which 
it  is  here  compared,  we  strike  at  a  vital  and  fundamental  prin- 
ciple affecting  the  legal  and  economic  rights  of  railway  employes. 
No  fault  can  be  found  with  the  public's  interest  in  keeping  open 
the  arteries  of  commerce;  indeed,  the  railway  is  an  essential  part 
of  our  modern  civilization.    It  is  dedicated  to  the  public  use, 


i 


I 


) 


> 


122 


RAILWAY  ENGINEERS  ARBITRATION 


RAILWAY  ENGINEERS  ARBITRATION 


123 


and  laws  regulating  it  in  the  public  interest  are  now  an  estab- 
lished policy.  But  with  all  this,  railways  are  privately  owned, 
and  the  relation  of  the  railway  employe  to  his  employer  is  private 
and  not  public.  Whatever  relation  the  railway  employe  may 
have  to  the  public  is  secondary  and  through  his  employer.  The 
railway  hires,  establishes  the  pay  and  regulations  of  employment* 
and  exercises  its  prerogative  as  a  private  employer  by  dismissing 
the  employe.  In  all  this  the  public  has  no  voice  and  very  little 
interest.  What  it  expects  is  that  the  railway  owners  and  employes 
should  work  together  peaceably,  and  it  makes  no  discrimination 
as  to  whether  the  employe  is  fairly  paid  or  underpaid.  The  fact 
that  the  railway  employe  is  engaged  in  an  employment  affected 
with  public  use  confers  upon  him  no  benefits  or  advantages  as 
compared  with  employes  engaged  in  other  private  industries;  on 
the  contrary,  he  suffers  disadvantages  on  account  of  the  character 
of  the  service  he  performs,  with  its  hazards,  great  responsibilities 
and  many  other  exactions,  such  as  age  limits,  physical  exami- 
nations, severity  of  discipline,  and  so  on. 

These  conditions  make  necessary  the  organization  of  railway 
employes  for  their  own  protection  and  advancement,  just  as  if 
they  were  engaged  in  any  other  industry.  To  take  away  from 
them  their  present  industrial  defenses  because  of  their  relation 
to  the  public  service  simply  with  the  promise  that  they  would 
be  treated  fairly  by  a  wage  commission  or  other  tribunal  created 
for  the  purpose,  is  wholly  inadvisable.  It  is  a  change  that  no 
person  familiar  with  labor  and  economic  conditions  as  between 
the  railways  and  their  employes  would  recommend  the  employes 
to  accept.  There  can  be  no  comparison  between  fixing  a  trans- 
portation rate  by  a  commission  with  the  view  of  determining  a 
fair  measure  of  justice  between  a  railway  and  the  public,  and 
fixing  a  wage  rate  between  the  railway  and  its  employes.  There 
is  a  human  element  in  every  wage  controversy  that  can  never 
be  measured  by  statistics,  averages,  graphics,  and  so  on,  such  as 
abound  in  this  arbitration  and  similar  wage  controversies. 


/ 


f 


i 


V 


i 


> 


In  conclusion,  I  wish  to  emphasize  my  dissent  from  that  recom- 
mendation of  the  Board  which  in  effect  virtually  means  compul- 
sory arbitration  for  the  railroads  and  their  employes.  Regardless 
of  any  probable  constitutional  prohibitions  which  might  oper- 
ate against  its  being  adopted,  it  is  wholly  impracticable.  The 
progress  toward  the  settlement  of  disputes  between  the  railways 
and  their  employes  without  recourse  to  industrial  warfare  has 
been  marked.  There  is  nothing  under  present  conditions  to  pre- 
vent its  continuance.  It  will  never  be  perfect,  but  even  so,  it 
will  be  immeasurably  better  than  it  would  be  under  conditions 
such  as  the  Board  propose.  The  peace  that  would  satisfy  such 
an  ideal  condition  as  that  had  in  mind  by  those  making  the  rec- 
ommendation, would  be  too  dearly  bought  even  if  it  could  be 
attained.  To  insure  the  permanent  industrial  peace  so  much 
desired  will  require  a  broader  statesmanship  than  that  which 
would  shackle  the  rights  of  a  large  group  of  our  citizens. 


(Signed)    P.  H.  Morrissey. 


November  S,  1912. 


FINIS 


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END  OF 
TITLE 


